THE SCIENCE AI 
WRITING LIFE INSURANCE 



MELVIN YOUNG 



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THE SCIENCE AND ART OF 
WRITING LIFE INSURANCE 



THE SCIENCE AND ART 

OF WRITING LIFE 

INSURANCE 



By 
MELVIN YOUNG 



Standard Course 



REVISED EDITION 
Published by 

NEW YORK INSURANCE SCHOOL 

560 WEST 163rd STREET, NEW YORK 






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COPYRIGHT NINETEEN HUNDRED TEN AND 

NINETEEN HUNDRED TWELVE 

BY MELVIN YOUNG 



ALL RIGHTS RESERVED 



CU33047.6 

2t<> i 



PREFACE 

The science and art of writing life insurance is 
not a natural growth in the brain — it must be 
acquired by experience or instruction. 

"Learning teacheth more in one year than expe- 
rience in twenty ; and learning teacheth safely when 
experience maketh more miserable than wise. 
He hazardeth sore that waxeth wise by experience. 
An unhappy shipmaster is he that is made 
cunning by many shipwrecks, a miserable mer- 
chant that is neither rich nor wise but after some 
bankrouts. It is costly wisdom that is bought by 
experience." 

The fundamental truths in the science and art 
of writing life insurance are formulated in this 
course of instruction as a vantage ground upon 
which a soliciting agent may succeed in the moral 
and financial sense success is measured. 

Author. 



INDEX 

I. Lesson — The Analysis of a Premium. 
II. Lesson — Dividends: Participating and 
Non-Participating. 
III. Lesson — Policy-Contracts. 
IV. — Lesson — The Art of Procuring Prospects. 
V. Lesson — The Art of Approaching Pros- 
pects: Where, When and 
How. 
VI. Lesson — The Art of presenting a Prop- 
osition. 
VII. Lesson — The Art of Delivering Policies. 
VIII. Lesson — The Science of Credit as 

Applied to Initial Premiums. 
IX. Lesson — Argument. 
X. — Lesson — Personality. 
XL Lesson — Time and Work. 
XII. Lesson — Life Insurance as a Profession. 



LESSON I 
THE ANALYSIS OF A PREMIUM 



The Science of Insurance 



Mortality 

This lesson is written from a soliciting agent's 
point of view with direct application to field 
work. Your mission is not to make actuaries, 
but policy-holders out of prospects. You have 
no more time to teach prospects the science of 
insurance than a lawyer has time to teach 
clients the science of law, or a physician has 
time to teach patients the science of medicine. 
The science of insurance should never ~be men- 
tioned to a prospect unless it is necessary to 
remove an objection or a popular error on which 
an application may hinge. 

1. The life of an individual is uncertain, but the 
average life of a collection of individuals is cer- 
tain. In other words, the number of deaths is 
known, but the order of death is unknown. The 
average mortality rate of a collection of individuals 
is obtained by the observation of 100,000 healthy 
lives, beginning at the age of 10 and noting the 
number of deaths each year to the age of 96, when 
the last man is presumed to die. The result of this 
observation is known as the American Experience 
Table of Mortality. This table is the foundation 
upon which all life insurance companies in the 
United States are based and their policy contracts 
constructed. 



8 THE SCIENCE OF INSURANCE. 

Two Systems 

2. There are two general systems of life insur- 
ance: the natural premium system, which is 
known as the assessment or fraternal; and the 
scientific premium system, which is known as the 
"old line" or level premium. 

3. The Natural. — The premium rates of the 
natural system are collected as they accrue, in 
accordance with the advancing age and the 
increasing scale of mortality. The logical result 
of this system in practice is shown by the following 
illustration, based on the American Experience 
Table: The ultimate rate of mortality at age 35 
is approximately 9 to 1,000. At the age of 50, 
there will remain from the original 1,000 members 
but 853 survivors, 12 of whom will die that year; 
at the age of 60 there will remain from the 
original 1,000 but 708 survivors, 19 of whom will 
die that year; at the age of 80 there will remain 
from the original 1,000 but 176 survivors, 25 of 
whom will die that year ; and at the age of 96 there 
will remain from the original 1,000 but one sur- 
vivor, who is presumed to die that year. 

4. If the original 1,000 members each insure 
for $1000, without expense charge, in a natural 
premium Order or Association, it is obvious that 
the 1,000 members at age 35 must each pay $9 in ad- 
vance to provide a fund from which to pay $1000 
to each one of the beneficiaries of the 9 members 
who die that year; the surviving 853 members at 



THE ANALYSIS OF A PREMIUM. 9 

age 50 must each pay $14 in advance to provide a 
fund from which to pay $1000 to each one of the 
beneficiaries of the 12 members who die that year; 
the surviving 708 members at age 60 much each 
pay $27 in advance to provide a fund from which 
to pay $1000 to each one of the beneficiaries of 
the 19 members who die that year; the surviving 176 
members at the age of 80 much each pay $142 in 
advance to provide a fund from which to pay $1000 
to each one of the beneficiaries of the 25 members, 
who die that year; and the one surviving member 
at age 96 must pay $1000 in advance to provide a 
fund from which to pay his beneficiary $1000 
in event of his death that year. 

5. If, for illustration, 4 men insured for $1000 
each under the natural premium system, without 
charge for expense, and 1 died each year during 
the 4 years, it is obvious that the 4 members would 
each have to pay in advance the first year a 
natural premium of $250 to provide a fund from 
which to pay $1000 to the beneficiary of the one 
who died that year; the second year, the 3 sur- 
viving members would each have to pay in advance 
a natural premium of $333.34 to provide a fund 
from which to pay $1000 to the beneficiary of the 
one who died that year ; the third year the 2 surviv- 
ing members would each have to pay in advance a 
natural premium of $500 to provide a fund from 
which to pay $1000 to the beneficiary of the one 
who died that year; and the fourth year the 1 



10 THE SCIENCE OF INSURANCE. 

survivor would have to pay in advance a natural 
premium of $1000 to provide a fund from which 
to pay his beneficiary $1000 when he died that year. 

6. The shock of the increased rate of the 
natural premium system from time to time, unless 
otherwise provided for, causes the younger and 
healthier members to desert the Order or Associa- 
ation, leaving the older and impaired risks to 
accelerate a higher rate of mortality that ulti- 
mately wrecks the Order or Association. 

7. Objections. — There are many objections in 
practice to the natural premium system of life 
insurance. The assets of the Order or Association 
in America are in the pockets of the members, and 
in event of death the certificate or by-law, as a 
rule, promises to make one assessment, and the 
amount realized will be paid as a benefit not to 
exceed the face amount of the certificate. Suffice 
it to say, however, that assessment companies, as 
business organizations in America, are fast dis- 
appearing, and the tendency of fraternal orders 
is growing toward the scientific method of cal- 
culating the premium rates. 

8. The scientific system cures the defects of 
the natural premium system. The terms of the 
policy are fixed and guaranteed, the assets of the 
company are in the treasury, instead of the pockets 
of the members, and there is no liability unless the 
money is paid in advance to cover it. The scien- 
tific system equalizes the premium rate by making 



THE ANALYSIS OF A PKEMIUM. 11 

an excess charge over the natural rate among the 
younger ages to offset the higher natural premium 
rate among the older ages. In other words, the 
scientific premium is the commuted equivalent of 
the natural premium, and it is fixed at the age 
of entry. 

9. The Scientific. — If 4 men insured for $1000 
each under the scientific system without charge for 
expense and 1 member died each year during the 
4 years, it is obvious that the total amount of risk 
would be $4000. In order to procure and 
guarantee a level annual premium for each 
member and $1000 at death, we ascertain the 
amount of the premium by dividing the $4000 at 
risk by the total number of annual premiums to 
be paid in 4 years. In other words, there will be 
4 premiums paid in advance the first year, 3 the 
second year, 2 in the third year, and 1 the fourth 
year, making a total of 10. If you divide $4000 
by 10 we obtain a $400 premium per $1000 insur- 
ance for each one of the 4 men. 

10. The first year, the 4 men each pay $400 in 
advance and thereby create a fund of $1600; 1 
man dies and his beneficiary receives $1000, leav- 
ing a balance of $600 in the treasury. The second 
year, the 3 survivors each pay $400 in advance, or 
a total of $1200, which added to the $600 balance 
creates a fund of $1800; 1 man dies and beneficiary 
receives $1000, leaving a balance of $800 in the 
treasury. The third year the 2 survivors each pay 



12 THE SCIENCE OF INSURANCE. 

$400 in advance or a total of $800, which added to 
the $800 balance creates a fund of $1600; 1 man 
dies and his beneficiary receives $1000, leaving a 
balance of $600 in the treasury. The fourth year the 
1 survivor pays $400 in advance, which added to 
the $600 balance creates a fund of $1000; he dies 
and his beneficiary receives $1000 which balances 
the account. 

Illustration 

11. Year 



Men 

— 4 X 
1 dies. 


Premium 

$400 
400 

400 

400 


Tieasury 

$1600 
1000 


— 3 X 


600 
1200 


1 dies. 


1800 
1000 


— 2 X 


800 
800 


1 dies. 


1600 
1000 


— 1 X 


600 
400 


1 dies. 


1000 
1000 







Analysis of a Premium 
12. Ordinary Life. — The ordinary life policy 
is the unit in the scientific system of life insurance, 
the same as a dollar is the unit in our currency 
system. The ordinary life policy promises to 
pay $1000 or more in event of death in considera- 
tion of a level annual premium fixed for life at the 



THE ANALYSIS OF A PREMIUM. 13 

age of entry, with extensions, paid-up or cash 
options after 3 years. The annual participating 
rate at age 35 for $1000 ordinary life insurance is 
approximately $28 less the dividends. The non- 
participating rate is obtained by subtracting the 
estimated dividends from the participating rate. 
The $28 premium at age 35 is composed of three 
elements : 

Mortality, Reserve and Expense 

13. Mortality. — The ultimate death rate at 
age 35 is approximately 9 to 1,000. In other 
words, $9 collected in advance without expense 
from all who insure at age 35 will pay $1000 to the 
beneficiaries of all who die from their number that 
year. But the mortality rate for the next year 
will be higher because the older the members get 
the faster they die, hence $9 collected in advance 
from the survivors will not be sufficient to pay 
$1000 to the beneficiaries of those who die the next 
year at age 36, or at any older age. A difference 
of $12 at 3 per cent, compound interest is required 
each year in addition to the $9 mortality element 
to pay $1000 to the beneficiaries of all who die 
between the ages of 35 and 96. This $12 at 3 per 
cent, compound interest in an ordinary life 
premium at age 35 is called the legal reserve 
element. 

14. Legal Reserve. — The $12 reserve at 3 per 
cent, compound interest added to the $9 mortality 



14 THE SCIENCE OF INSURANCE. 

element gives us a net annual premium of $21. In 
other words, if 1,000 men at age 35 insure for 
$1000 each, with no charge for expenses, their 
annual premium would be $21. In event of death, 
the company would theoretically take the $12 
reserve with compound interest accumulations on 
the policies of those who died the next year, or at 
age 36, and reach over in the mortality element 
for the difference — $988 — and pay to each of the 
beneficiaries of those who died ($12 + $988) $1000; 
in event of death at age 40, the company would 
take the $12 reserve that had accumulated from 
each premium during the past 5 years, which 
would be $60, plus the interest, on the policies 
of those who died that year, and reach over in 
the mortality element for the difference — $940 — 
and pay to each of the beneficiaries of those who 
died ($60 + $940) $1000. In event of the 1 
survivor's death at age 96, the $12 accumulated 
reserve with compound interest from each 
premium paid on his policy since age 35 would 
amount to $1000 for his beneficiary. 

15. The Expense Element. — We will now 
provide for the expense of procuring and conduct- 
ing the business. The amount obtained for this 
purpose is called the expense element or loading. 
Different companies have different methods of 
calculating this amount, but when all the various 
methods are reduced to their last analysis, the 
result is a percentage of the net premium which 




THE ANALYSIS OF A PREMIUM. 15 

at age 35 approximates $7 per annum per $1000 
on an ordinary life policy. Hence, these three 
elements, $9 mortality plus $12 reserve at 3 per 
cent, compound interest equals $21, the net pre- 
mium plus $7 expense, equals $28, the gross 
participating premium for $1000. 

16. In other words, the mortality element in 
an ordinary life premium is what a policy-holder 
contributes toward paying the 

death claims of those who die; 
the reserve element is what he 
contributes toward paying his 
own claim in event of death, 
and the expense element is what 
he contributes toward paying the 
expense of conducting the business. 

17. Some prospects object to an ordinary life 
policy on account of the continuous payments for 
life. In other words, they prefer a limited pay- 
ment life policy, covering the productive period 
of their lives. Hence, the company issues a 
limited payment life. 

18. A Twenty -Payment Life. — A twenty-pay- 
ment life policy promises to pay $1000 or more in 
event of death during the 20 years, and it guaran- 
tees a paid-up policy for the face amount without 
further payments or medical examination at the 
completion of the 20-year period, with extension, 
paid-up or cash surrender option after 3 years. 
The annual participating rate at age 35 for $1000, 



16 THE SCIENCE OF INSURANCE. 

twenty-payment life, is approximately $37, 
less the dividends. The non-participating rate is 
obtained by subtracting the estimated dividends 
from the participating rate. 

19. A twenty-payment life policy at age 35 is 

constructed from the ordinary life 
==f premium by increasing the $12 

/l\ reserve to a sum of money which 

/-LA put at 3 per cent, compound in- 
JUlJft terest for 20 years would amount 
to the single premium required at 
age 55 to buy $1000 paid-up for 
life. We find by adding $9 to the $12 reserve 
in the ordinary life premium at age 35 that we 
have approximately $21, which at 3 per cent, com- 
pound interest would be the legal reserve. Hence, 
at the age of 35, the 3 elements of a twenty-pay- 
ment life premium are as follows: Mortality $9 
plus $21 legal reserve at 3 per cent, equals $30, 
the net premium plus $7 expense equals $37, the 
gross annual participating premium for $1000 
twenty-payment life policy, with the option of 
drawing the reserve in cash at the end of 20 years 
in lieu of a paid-up policy. 

20. In other words, we construct from an 
ordinary life premium a twenty-payment life 
policy at any age by increasing the amount of the 
reserve which correspondingly increases the 
amount of the surrender option. Some prospects 
object to a twenty-payment life policy because 



THE ANALYSIS OF A PREMIUM. 



17 



they prefer a policy that will not only, in event of 
death, give their beneficiary $1000 or more, but one 
that will also give the insured $1000 in cash in 
event he lives 20 years. Hence, the company 
issues a twenty-year endowment. 

21. A Twenty -Y car Endowment. — A twenty- 
year endowment policy promises to pay $1000 or 
more in event of death during the 20 years or the 
face amount of the policy in cash at the comple- 
tion of the twenty-year period, with extensions, 
paid-up or cash surrender options after 3 years. 
The annual participating rate at age 35 for $1000 
endowment is approximately $49, less the divi- 
dend. The non-participating rate is obtained by 
subtracting the estimated dividends from the par- 
ticipating rate. 

22. The twenty-year endow- 
ment policy at age 35 is con- 
structed from the ordinary life 
premium by increasing the $12 
reserve to a sum of money which 
put at 3 per cent, compound 
interest for 20 years would produce $1000 in cash. 
We find by adding approximately $21 to the $12 
reserve of the ordinary life premium at age 35 we 
have $33, which at 3 per cent, compound interest 
would be the legal reserve in a twenty-year endow- 
ment premium for $1000. 

23. Hence, at age 35, the 3 elements of a 
twenty-year endowment premium are as follows: 




18 THE SCIENCE OF INSURANCE. 

The mortality element, $9, plus $33 reserve at 
3 per cent, equals $42, net premium plus $7 for 
expense equals $49, gross annual participating 
premium. In other words, we construct from an 
ordinary life premium a twenty-year endowment 
policy at any age by increasing the reserve which 
correspondingly increases the amount of the 
surrender option after 3 years. The 10 and 15- 
payment life, as well as the 10 and 15-year endow- 
ments, are constructed from the ordinary life 
premium by increasing the reserve in the same 
way. 

24. If a company accepts an applicant at age 
35, or any form of policy, it is prima facie evidence 
according to the American Experience Table of 
Mortality that the applicant's chances of dying in 
20 years are only 2 in 10. In other words, his 
chances of living are 8 to 10, hence the question of 
plan should hinge on the probability of living as 
well as the possibility of death. The law of 
mortality is as regular as the law of gravitation — 
when a company has men enough insured for the 
law to operate. 

25. Surrender Options. — If for any reason a 
policy-holder wishes to surrender a policy after it 
has been in force for three years, life insurance 
companies will give him in cash the legal reserve 
that has accumulated to that date on his policy; or 
if he prefers, its equivalent in extended insurance, 
without further payment of premium, for as many 



THE ANALYSIS OF A PKEMIUM. 19 

years and days as the cash value would carry the 
face of the policy on a term rate; or, the cash 
equivalent in paid-up insurance due at death. 
Companies, as a rule, do not give this cash 
surrender privilege until the completion of the 
third policy year, because the initial premium is 
not sufficient to pay the initial expense of the 
business. 

26. In other words, when the legal reserve and 
current mortality are set aside, the soliciting agent's 
commission, examination and inspection fees are 
paid — the policy is in debt to the company, hence 
there is nothing due the policy-holder in event of 
lapse or surrender until the third year. After the 
third year a small surrender charge is made by 
many companies in event of lapse or surrender to 
offset the loss by virtue of adverse selection. When 
an applicant is accepted, the company is bound by 
the terms of the contract to accept the future pre- 
miums when tendered regardless of the applicant's 
subsequent physical condition, whereas the ap- 
plicant has the power to terminate the contract at 
will. Applicants who exercise this power and lapse 
their policies are alleged to be healthy risks, where- 
as the unhealthy risks seldom lapse, but they con- 
tinue their policies until death or maturity. Hence 
the necessity of a surrender charge, to offset the 
cost of adverse selection. On the other hand, if 
the unhealthy instead of the healthy risks would 
lapse, then the selection would operate in favor of 



20 THE SCIENCE OF INSURANCE. 

the company and no surrender charge would be 
necessary. Some American companies, however, 
make no surrender charge in event of lapse after 
the third year. They claim that those who lapse 
are no better risks than those who remain, hence 
there is no adverse selection. 

27. Technical Point. — Some writers on the 
science of insurance advance the theory of two 
elements in a premium — mortality and expense. 
That theory plays hide and seek with the reserve. 
A company may assemble the two elements — 
mortality and reserve — in one account at the 
Home Office for convenience in bookkeeping and 
call it the mortality element (if by so doing it 
serves any useful purpose) just as easily as they 
can assemble the three elements — mortality, 
reserve and expense in one account and call it a 
gross premium. 



THE ANALYSIS OP A PBEMIUM. 



21 



AMERICAN EXPERIENCE TABLE OF 
MORTALITY 



Age 


Sur- 
vivors 


Deaths 


Age 


Sur- 
vivors 


Deaths 


Age 


Sur- 
vivors 


Deaths 


10 


100,000 


749 


40 


78,106 


765 


70 


38,569 


2,391 


11 


99,251 


746 


41 


77,341 


774 


71 


36,178 


2,448 


12 


98,505 


743 


42 


76,567 


785 


72 


33,730 


2,487 


13 


97,762 


740 


43 


75,782 


797 


73 


31,243 


2,505 


14 


97,022 


737 


44 


74,985 


812 


74 


28,738 


2,501 


15 


96,285 


735 


45 


74,173 


828 


75 


26,237 


2,476 


16 


95,550 


732 


46 


73,345 


848 


76 


23,761 


2,431 


17 


94,818 


729 


47 


72,497 


870 


77 


21,330 


2,369 


18 


94,089 


727 


48 


71,627 


896 


78 


18,961 


2,291 


19 


93,362 


725 


49 


70,731 


927 


79 


16,670 


2,196 


20 


92,637 


723 


50 


69,804 


962 


80 


14,474 


2,091 


21 


91,914 


722 


51 


68,842 


1,001 


81 


12,383 


1,964 


22 


91,192 


721 


52 


67,841 


1.044 


82 


10,419 


1,816 


23 


90,471 


720 


53 


66,797 


1,091 


83 


8,603 


1,648 


24 


89,751 


719 


54 


65,706 


1,143 


84 


6,955 


1,470 


25 


89,032 


718 


55 


64,563 


1,199 


85 


5,485 


1,292 


26 


88,314 


718 


56 


63,364 


1,260 


86 


4,193 


1,114 


27 


87,596 


718 


57 


62,104 


1,325 


87 


3,079 


933 


28 


86,878 


718 


58 


60,779 


1,394 


88 


2,146 


744 


29 


86,160 


719 


59 


59,385 


1,468 


89 


1,402 


555 


30 


85,441 


720 


60 


57,917 


1,546 


90 


847 


385 


31 


84,721 


721 


61 


56,371 


1,628 


91 


462 


246 


32 


84,000 


723 


62 


54,743 


1,713 


92 


216 


137 


33 


83,277 


726 


63 


53,030 


1,800 


93 


79 


58 


34 


82,551 


729 


64 


51,230 


1,889 


94 


21 


18 


35 


81,822 


732 


65 


49,341 


1,980 


95 


3 


2 


36 


81,090 


737 


66 


47,361 


2,070 


— 


— 


— 


37 


80,353 


742 


67 


45,291 


2,158 


— 


— 


— 


38 


79,611 


749 


68 


43,133 


2,243 


— 


— 


— 


39 


78,862 


756 


69 


40,890 


2,321 


~~ 


~ 


~ 



22 



THE SCIENCE OF INSUKANCE. 



NET NATURAL PREMIUM RATES 

AT 3% 

For $1,000 of Insurance Payable in Event 
of Death 



AGE 


RATE 


AGE 


RATE 


AGE 


RATE 


10 


$7.26 


40 


$9.50 


70 


$60.18 


11 


7,29 


41 


9.71 


71 


65.69 


12 


7.33 


42 


9.95 


72 


71.58 


13 


7.35 


43 


10.21 


73 


77.83 


14 


7.37 


44 


10.51 


74 


84.49 


15 


7.42 


45 


10.83 


75 


91.62 


16 


7.44 


46 


11.22 


76 


99.32 


17 


7.46 


47 


11.65 


77 


107.83 


18 


7.51 


48 


12.14 


78 


117.30 


19 


7.53 


49 


12.72 


79 


127.88 


20 


7.57 


50 


13.38 


80 


140.25 


21 


7.62 


51 


14.11 


81 


153.99 


22 


7.67 


52 


14.94 


82 


169.21 


23 


7.73 


53 


15.85 


83 


185.98 


24 


7.77 


54 


16.89 


84 


205.20 


25 


7.82 


55 


18.03 


85 


228.69 


26 


7.88 


56 


19.30 


86 


257.93 


27 


7.95 


57 


20.70 


87 


294.20 


28 


8.02 


58 


22.26 


88 


356.59 


29 


8.11 


59 


24.30 


89 


384.33 


30 


8.17 


60 


25.92 


90 


441.31 


31 


8.26 


61 


28.03 


91 


516.96 


32 


8.35 


62 


30.38 


92 


615.79 


33 


8.46 


63 


32.94 


93 


712.79 


34 


8.57 


64 


35.79 


94 


832.18 


35 


8.68 


65 


38.95 


95 


970.87 


36 


8.81 


66 


42.44 


— 


— 


37 


8.97 


67 


46.26 


— 


— 


38 


9.12 


68 


50.48 


— 


— 


39 


9 30 


69 


55.10 


— 


— 



THE ANALYSIS OF A PEEMIUM. 



23 



NET LEVEL ANNUAL PREMIUM 
RATES AT 3% 

For $1,000 of Insurance Payable at Death 



AGE 


RATE 


AGE 


RATE 


AGE 


RATE 


10 


$11.95 


40 


$24.75 


70 


$101.33 


11 


12.15 


41 


25.62 


71 


107.50 


12 


12.36 


42 


26.54 


72 


114.12 


13 


12.58 


43 


27.52 


73 


121.23 


14 


12.81 


44 


28.56 


74 


128.91 


15 


13.05 


45 


29.66 


75 


137.24 


16 


13.29 


46 


30.84 


76 


146.35 


17 


13.55 


47 


32.09 


77 


156.35 


18 


13.83 


48 


33.43 


78 


167.40 


19 


14.11 


49 


34.85 


79 


179.65 


20 


14.41 


50 


36.36 


80 


193.31 


21 


14.72 


51 


37.97 


81 


208.49 


22 


15.04 


52 


39.68 


82 


225.48 


23 


15.38 


53 


41.91 


83 


244.69 


24 


15.74 


54 


43.46 


84 


266.83 


25 


16.11 


55 


45.54 


85 


292.73 


26 


16.51 


56 


47.76 


86 


323.13 


27 


16.92 


57 


50.13 


87 


358.58 


28 


17.35 


58 


52.66 


88 


399.35 


29 


17.80 


59 


55.37 


89 


446.40 


30 


18.28 


60 


58.27 


90 


502.68 


31 


18.79 


61 


61.36 


91 


572.39 


32 


19.31 


62 


64.68 


92 


656.07 


33 


19.87 


63 


68.23 


93 


743.75 


34 


20.46 


64 


72.03 


94 


849.07 


35 


21.08 


65 


76.11 


95 


970.87 


36 


21.74 


66 


80.48 


— 


— 


37 


22.43 


67 


85.17 


— 


— 


38 


23.16 


68 


90.19 


— 


— 


39 


23.93 


69 


95.57 

1 


— 


— 



REVIEW QUESTIONS 

How is the American Experience Table of Mor- 
tality obtained? Name two general systems of life 
insurance. Define each. How are the premium 
rates of the natural system obtained? State ob- 
jections to the natural premium system. How 
does the scientific system cure the defects of the 
natural premium system? What is the unit in 
the scientific system of life insurance? Define an 
ordinary life policy. How is the gross premium 
of an ordinary life policy for $1000 at age 35 ob- 
tained? Name and define the three elements of a 
premium. For what specific purpose is each of 
the three elements contributed? Define the dif- 
ference between a net and a gross premium. Why 
do some prospects object to an ordinary life policy? 
Define a limited payment life policy. 

How is the gross premium on $1000 Twenty- 
Payment life policy at age 35 obtained? Why do 
some prospects object to a limited payment life 
policy? Define an Endowment policy. How is 
the gross premium on a Twenty Year Endowment 
policy for $1000 at age 35 obtained? How is a 
non-participating rate obtained? Upon what 
should the question of policy plan hinge? What 
are surrender options? How and when are sur- 
render options given? From what element in the 
premium are surrender options available ? What is 
necessary to insure regularity in the law of mortal- 
ity? Is the initial annual premium sufficient to pay 
the expense of procuring and establishing a policy? 



LESSON II 

DIVIDENDS : PARTICIPATING 
AND NON-PARTICIPATING 



Dividends 

Participating and Non-Participating 

Source of Dividends 

Our aim in this lesson is to impart a working 
knowledge of dividends, their source and meth- 
ods of distribution. In doing so, we have tried 
to thread our way through conflicting interests 
with impartiality; if, by any manner of inter- 
pretation we have failed in our aim, kindly ad- 
vise us and we will change the phraseology on 
any point to compass that end. 

1. We learned in the last lesson that the three 
elements of a participating initial premium for 
$1000, Ordinary life policy at age 35, were approxi- 
mately: $9 mortality, $12 at 3 per cent, reserve 
and $7 expense, making the total gross premium 
$28. 

2. The mortality element in a premium is based 
on the theory that the insured will continue his 
policy until death or maturity, but owing to a 
favorable medical selection, the amount required 
may be 20 per cent, less than the amount collected, 
hence there would be a saving from the mortality 
element of $1.80; the reserve element may be 
calculated on a 3 per cent, interest basis, whereas 
the average interest earnings of the company may 
be 5 per cent.; hence there may be a saving from 



30 THE SCIENCE OF INSURANCE. 

the excess interest earnings over and above the 
legal requirement of 2 per cent. ; and the expenses 
of conducting the business may be $5 instead of 
$7, hence there may be a saving from the expense 
element of $2. The savings from these different 
elements at the end of a policy year are commonly 
called surplus, profits or dividends. 

3. Participating. A participating or annual 
dividend policy is one on which the gross premium 
is collected in advance and the savings are returned 
in the form of cash dividends to the policy-holder 
or as a credit on his next premium at the end of the 
policy year, or their equivalent in paid-up additions 
to the face of the policy. In other words, if the 
savings from the various elements of a $28 partici- 
pating rate at age 35 on a $1000 ordinary life policy 
at the end of the policy year amount to $4, the 
policy-holder would be credited with the same in 
cash, or on his second premium or paid-up addi- 
tions. The percentage of savings or dividends 
from the first year's premium would be $4 divided 
by $28 or 14 per cent. 

4. Non-Participating. A non-participating 
policy is one from which the savings or dividends 
expected to be earned by a company are estimated 
and deducted in advance from the gross partici- 
pating rate. In other words, if the gross partici- 
pating rate at age 35 for $1000 ordinary life policy 
is $28 and the average expected savings or dividends 
at the end of the policy year is estimated at $6, the 



DIVIDENDS. 31 

non-participating rate would be $28 minus $6 or 
$22. The same is true of the rate on participating 
limited payment life and endowment policies. 
Hence, the difference between a participating and 
a non-participating policy is simply the difference 
in the method of returning the savings or dividends 
to the policy-holder. The participating policy col- 
lects the gross premium and returns the savings 
to the policy-holder at the end of the policy year, 
less a certain amount, generally fixed by law, to 
meet unforeseen contingencies; whereas, the non- 
participating policy estimates the average dividend 
expected to be earned and deducts it in advance, 
less a certain amount, generally fixed by law, to 
meet unforeseen contingencies; hence it gives a 
lower fixed rate in lieu of dividends. 

5. The non-participating policy claims a lower 
rate during the earlier years of its history, where- 
as the participating policy claims a lower rate 
during the later years. The participating rate is 
more than the actual cost, for the same reason that 
the estimated savings or dividends on a non-par- 
ticipating policy are less than the savings or divi- 
dends expected to be earned; otherwise, the pre- 
mium rates in both cases, under adverse circum- 
stances, might prove too low. 

Dividends 

6. Dividends or profits do not always indicate 
the relative earning power of a life insurance com- 



32 THE SCIENCE OF INSURANCE. 

pany. A soliciting agent may select a favorable 
year for dividend comparison that would be mis- 
leading if compared with an unfavorable year of 
another company, whereas the result might be re- 
versed when compared with a long period of years. 
The only fair way to determine the relative earn- 
ings of a company is to take a long period of years 
which will embrace favorable and unfavorable 
experience. In other words, you should take the 
lean as well as the fat years. 

7. Dividends vary from different causes. The 
expense element, for illustration, may be larger or 
smaller in the premium of one company than it is 
in the premium of another, which would affect the 
savings from that source. Some companies may 
have no savings from the expense element because 
that element was small to begin with; whereas 
another company may have a large saving from 
that element because it was large to begin with. 
A company with a large expense element and a 
high interest basis — such as 4 per cent., with a 
corresponding lower legal reserve, will have a 
larger margin of savings or dividends from that 
source than a company with a smaller expense 
element and a low interest basis — such as 3 or 3% 
per cent., with a corresponding higher legal 
reserve ; hence the dividends in that case would not 
indicate the real comparative earning power of the 
two companies. 

8. These inequalities are frequently indicated 



DIVIDENDS. 33 

by the difference in the amount of the premium 
for the same age and plan in different companies. 
The mortality element in one company may fluctu- 
ate more than the same element in another, on 
account of the company having a smaller number 
of lives insured than the table on which the mor- 
tality element is based; hence the savings from 
that source may vary from that cause. The 
favorable mortality of a small company during a 
certain year may be reversed when extended over 
several years — and vice versa. 

9. In dividend comparison you must be certain 
to compare like with like. The ages, amounts, 
plans and rates should always be the same. If 
there is a difference in the premium rates between 
the two companies, on the same plan and age, the 
cause should be ascertained and the comparative 
difference should be considered accordingly. 

10. Avoid, if possible, percentage comparison. 
In other words, you may be talking a participating 
endowment with an 8 per cent, dividend to a 
prospect while your competitor may mislead him 
with a 10 or 14 per cent, dividend on a cheaper 
plan. For illustration, if the annual dividend is 
$4 divided by $49, the participating rate on an en- 
dowment for $1000 at age 35, the dividend per- 
centage would be 8 per cent. ; if the annual dividend 
is $4 divided by $37, the participating rate on a 
limited payment life for the same age and amount, 
the dividend percentage would be 10 per cent.; 



34 THE SCIENCE OF INSURANCE. 

and, if the dividend is $4 divided by $28, the partici- 
pating rate on an ordinary life policy for the same 
age and amount, the dividend percentage would be 
14 per cent.; hence it is obvious that your com- 
petitor could show an unfavorable percentage com- 
parison if he used the percentage on the ordinary 
life or a limited payment policy in comparison with 
the percentage on your endowment; whereas the 
true percentage, when you compared like with 
like, might be in your favor. The dividends in 
dollars and cents may be exactly the same on each 
of the three plans, but the percentage varies ac- 
cording to the comparative size of the premium. 

11. In comparing a non-participating with a 
participating policy of the same age, amount and 
plan, the difference between the participating rate 
and the non-participating rate represents the 
dividend on the non-participating policy. In 
other words, if the participating rate on a limited 
payment life policy for $1000 at age 35 is $37 
and the non-participating rate on the same plan, 
age and amount, is $30, the $7 difference in pre- 
mium represents the dividend on the non-partici- 
pating policy. Likewise, if the dividend at the 
end of the first year on the participating policy in 
question is $4 divided by $37, the participating rate, 
the dividend would be 10 per cent. ; whereas if you 
divide the $7 difference between the two rates by 
$37, the non-participating dividend would be 18 
per cent. 



DIVIDENDS. 35 

Distribution Methods 

12. In the earlier history of American life 
insurance, dividends were paid on participating 
policies at irregular intervals. Some companies 
then established the practice of paying dividends 
at regular intervals of five years until the practice 
of paying them annually has finally evolved. Com- 
panies that pay annual dividends begin, as a rule, 
at the end of the first policy year, when the second 
annual premium becomes due and pay the dividend 
at the option of the policy-holder, either (1) in 
cash; or (2) cash applied to reduce the premium; 
or (3) in cash applied to buy paid-up insurance to 
be added to the face of the policy; or (4) in cash 
applied to buy an annuity on the life of the 
insured. The first two of these methods, however, 
are the most popular forms of annual distribution. 

13. Deferred Dividends. Another form of 
distribution on participating policies is known as 
the deferred dividend. Under this plan of dis- 
tribution, the gross or full premium is paid each 
year on any form of policy until the completion of 
a certain period, usually 5, 10, 15 or 20 years. 
The applicant determines the length of the period 
at the time of application and he agrees that no 
dividends are to be paid on his policy until the 
completion of the period selected. If he dies or 
surrenders his policy during the period, he forfeits 
his dividends to those of his class who live and com- 
plete the distribution period. On the other hand, if 



36 THE SCIENCE OF INSURANCE. 

he lives and maintains his policy in force until the 
completion of the deferred dividend period, he 
receives his share of the dividends that were for- 
feited by others in his class, in addition to the regu- 
lar accumulated dividends or savings on his own 
policy. 

14. The difference between the results at 
maturity and the estimates given at the time of the 
application created dissatisfaction among many 
policy-holders and the life insurance companies 
operating under the New York State Insurance 
Department have ceased issuing the deferred divi- 
dend form of distribution. 

15. The very large proportion of the outstand- 
ing insurance of many companies in the United 
States is issued on the deferred dividend form of 
distribution; hence you will be questioned by 
policy-holders who have that form of policy. 
With this fact in view and the fact that many 
of our students are not as yet actively engaged in 
life insurance, as well as many other students who 
represent companies that now issue that form of 
policy, we will throw more light upon that subject. 

16. The question of difference between the 
estimates and results does not argue that the 
estimates were padded "to get" the applicant or 
that the results were shaved "to beat" him. On 
the contrary, there is reason to believe that the 
estimates were correct at the time they were made 
by the company and presented by the solicitor. If 



DIVIDENDS. 37 

at the maturity of these deferred dividend policies, 
you had the opportunity to make the settlements, 
you would realize that the difference is not so much 
between the results and estimates as it is between 
the results and the policy-holders' expectation. 
If you investigated the basis for that expectation, 
you would often find that it rests upon the policy- 
holders' cupidity and imagination. When a 
policy-holder gets more than he expects at the com- 
pletion of a deferred dividend period — he is silent; 
but, when he gets less, you can hear about it for 
miles around him. The crux of the question is 
not whether the deferred dividend result is greater 
or less than the estimate, but whether or not it is 
all that is due him. If it is all that is due him, 
then by his complaint he does the company and 
the ethics of the business a violent injustice; on 
the other hand, if it is not as much as is due him, 
the company is responsible, the doors of the courts 
are open and he knows his remedy. 

17. It is true that in some cases the result is 
less than the estimate. The policy-holder in that 
event is entitled to an explanation. It must be 
remembered that in the majority of cases, the 
estimate and result are 20 years apart. The 
"estimate" was an illustration of what the 
deferred dividend should be when the policy 
matures. This was based on past experience of 
the compairy; whereas the actual deferred divi- 
dend is paid on a future experience. If the con- 



38 THE SCIENCE OF INSURANCE. 

ditions upon which the company forecast the 
"estimate" had remained the same, the result at 
maturity would be the same. 

18. The deferred dividend policies when issued 
were void in event of suicide, or if the applicant 
engaged in any one of many prohibited occupa- 
tions, or traveled in a foreign country. They 
contained but one option in event of lapse — a paid- 
up policy. The companies at the time they made 
the "estimates" expected these conditions to con- 
tinue, but these conditions were changed, not by 
the company, but by legislative enactments, com- 
petition and judicial decisions. These changes, 
for illustration, compelled the companies to pay 
suicide claims; to give extended insurance after 
three years in event of lapse ; to give 30 days grace 
in payment of premium, freedom of residence, 
travel and occupation — all of which cost money. 
These changed conditions were not reckoned with 
when the "estimates" were calculated. 

19. A large number of applicants in America 
prefer the deferred- dividend method of distribu- 
tion. They calculate that their chances of living 
to the completion of the deferred-dividend period 
are greater than their chances of dying during that 
period. They argue that the dividends received in 
one sum at the completion of the period are worth 
more to them at that time in life than they would 
be if received in small amounts by the annual dis- 
tribution method. Their view is strengthened by 



DIVIDENDS. 39 

the further fact that in addition to the accumu- 
lated dividends on their policies, they will also 
receive their share of the dividends of their class 
who died or lapsed. They are conscious of the 
fact, that if they die during the period they will 
forfeit their dividends ; but they are also conscious 
of the fact that if they die during the period their 
beneficiaries would receive the face amount of the 
policies — which may be 100, 500, 1000 per cent, 
more than the insured had paid. They argue that 
the deferred dividend method of distribution is a 
check on lapse. In other words, the fear of for- 
feiture makes them persistent, steadies the 
business and spreads the beneficent character of 
insurance. 

Organization 
20. Mutual, Stock and Mixed. Old line or 
level premium companies are divided into three 
classes — mutual, stock and mixed. A mutual 
company has no capital stock, except the assets 
contributed by the policy-holders. The company 
is owned by the policy-holders who elect a govern- 
ing board of trustees. The trustees elect the 
executive officers. A stock company is a company 
with a stock capital which is owned by the stock- 
holders (shareholders) who elect a board of 
trustees. The trustees elect the executive officers. 
A mixed company is a stock company with the dis- 
tribution methods of a mutual company and the 
government of a stock company. In other words, 



40 THE SCIENCE OF INSURANCE. 

the theory of a mixed organization is that it com- 
bines the advantages of the other two kinds of or- 
ganizations and eliminates the disadvantages. 

21. The dividends expected to be earned by- 
stock companies issuing a non-participating policy 
are returned to the policy-holders in the form of a 
lower premium rate instead of by annual or 
deferred dividend methods as previously ex- 
plained. The dividends on the capital stock of a 
stock company are usually limited by the law in 
America to the regular rate of interest. In other 
words, the interest received by the stockholders 
on their money invested in the capital stock is no 
more, as a rule, than they would receive had they 
invested their money in other ways. Their interest 
earnings come from the investment of the money 
represented by the stock, and not from the policy- 
holders or their savings. 

22. Assets and Surplus. The assets of all life 
insurance companies consist of the legal reserve 
and surplus on all outstanding policies — every 
dollar of which is held in trust by the companies 
like the deposits in a bank for the use and benefit 
of the policy-holders. It must be returned to them, 
or to their beneficiaries, heirs or assigns, either at 
death, maturity or surrender. The surplus is the 
difference between the total amount of assets and 
the legal reserve required at 3 or S 1 ^ per cent, com- 
pound interest to fulfill all outstanding policy 
obligations. 



DIVIDENDS. 41 

23. Industrial Insurance. Industrial life 
insurance companies in America in contradistinc- 
tion to the regular ordinary companies, issue pol- 
icies averaging $150 in amount on weekly premium 
payments ranging from 5 cents to 70 cents for the 
purpose of creating a burial fund. A certain num- 
ber of these contiguous policy-holders compose a 
district designated as a "debit." A collector calls 
each week for the premiums on the debit. 

24. The amount of the premium determines the 
amount of insurance on an industrial policy; 
whereas the amount of the insurance determines 
the amount of the premium on an ordinary policy. 
Nearly all of the industrial companies write the 
regular ordinary forms of policy contracts. 

25. This course of instruction is not intended 
to teach the science or art of writing industrial 
insurance. 



REVIEW QUESTIONS 

Upon what theory is the mortality element in a 
premium based? Why is the gross amount of a 
premium collected always more than the amount 
required? From what element do savings accrue? 
What are the savings commonly called? Define a 
participating annual dividend policy. Define a 
a non-participating policy. How is a dividend 
percentage obtained? Why is a participating rate 
more than the actual cost ? Why are the estimated 
savings on a non-participating rate less than the 
dividends expected to be earned? Do the annual 
dividends always represent the relative earning 
power of a company? Define a fair method of de- 
termining the relative savings of a company. Why 
do dividends vary in different companies ? Why do 
the premiums for the same amount, age and plan 
differ in different companies? 

Why does the mortality element fluctuate in 
some companies more than in others ? How should 
dividend comparisons be made? Why should you 
avoid percentage comparisons? What represents 
the dividend when comparing non-participating 
with participating rate? In what way are false 
dividend comparisons made? How were dividends 
paid during the earlier history of life insurance? 
When do participating companies pay dividends? 
Define deferred dividends. Why are deferred 
dividend results sometimes less than the previous 
estimates? How are level premium companies 
divided as to organization? 



LESSON III 

POLICY-CONTRACTS IN 
LIFE INSURANCE 



Policy Contracts in Life 
Insurance 



The purpose of this lesson is to give you a 
bird's-eye view of policy forms and their salient 
features with the reason for their conditions, re- 
strictions, benefits and privileges. 

1. The first life insurance contract of which 
we have record was written on the 18th day of 
June, 1583, by and between a few merchants of 
London on the life of one man. The payer of the 
premium would win if the insured died within a 
specified time and the insurer would win if the 
insured survived the period. The contract was a 
bet or wager that would now be void in law — but 
it was the beginning of life insurance. 

2. Individuals in those days acted as insurers. 
But in time and the natural evolution of the 
business, the insurers shifted from individuals to 
regular life insurance companies, because an 
individual insurer might die before the insured, 
whereas a life insurance company is presumed to 
live always. The beneficiaries also shifted from 
those who had only a financial interest in the 
insured's death to those who had a financial 
interest in the insured's living. In other words, 
the beneficiary must now have an interest in the 



48 THE SCIENCE OF INSURANCE. 

continuance of the life of the insured and not merely 
a monetary interest in his death. 

3. A policy contract is based on a proposal in 
the form of an application with a detailed state- 
ment of the applicant's personal, physical and 
family history together with a report of a medical 
examiner who has made a verbal and physical 
examination of the applicant. If the application 
is approved, the policy is issued upon the truth of 
the statements and in consideration of the first 
premium and the payment of the future premiums 
when they become due. 

4. The applicant is the insured; the person to 
whom the policy is payable is the beneficiary; and 
the company is the insurer. There are three 
parties to the contract: — the applicant, the bene- 
ficiary and the company. The policy is evidence 
of the terms and conditions in which the minds of 
the parties met and agreed. The motives involved 
in framing the contract must be governed by 
equity, justice and public policy. 

5. Policy Forms. Life insurance companies 
issue a large variety of policy forms or plans, to 
meet the various needs, financial conditions and 
circumstances of applicants. The Ordinary life, 
Limited payment life and Endowment policies, 
previously explained, are the three popular forms. 
To these may be added what is known as a term 
policy which covers protection only for a short 
term of years and then expires like fire insurance. 



POLICY CONTRACTS. 49 

It is the cheapest policy form issued and 
it is designed only for temporary protec- 
tion. 

6. The limited payment and endowment forms 
of policies give several options of settlement in 
event of death or maturity and they also provide 
for cash or loans, extensions and paid-up values in 
event of surrender after three years. It requires 
the first three years as a rule for a policy to pay 
itself out of debt to the company, hence there is 
nothing due to the applicant in event of surrender 
until the third year. The applicant can reserve 
the right to change the beneficiary or he can make 
it absolute. A policy like other contracts may be 
assigned at any time. 

7. The policy is the entire contract and the 
company agrees to pay the face amount immedi- 
ately in event of death. The evidence of death 
is given to a company by a series of sworn certifi- 
cates on one paper sheet, known as proofs of death. 
Under the laws of most States a policy made pay- 
able to a wife or children is not liable for the debts 
of the insured. If a question of interpretation of 
a policy contract or a conflict between written and 
printed clauses occur, preference is always given 
to the written clauses and against the framers who 
are presumed to be familiar with the technicalities. 

8. Conditions, Privileges and Restrictions. 
The truth of the statements contained in the 
application and medical report are conditions pre- 



50 THE SCIENCE OF INSURANCE. 

cedent to the issuance of a policy; whereas the 
payment of the premiums is a condition to the 
continuance of the insurance. Statements in the 
policy contract setting forth the respective rights 
of the parties to the contract should be clear and 
distinct. Policies should become incontestable 
within a reasonable length of time from the date 
of issue, except for failure to pay premiums. Con- 
ditions should be imposed that would discourage 
and prevent fraud. That which is not prohibited 
in a contract is permitted, according to a well 
established principle of law. Hence, some privi- 
leges, such as travel, residence and occupation, 
would exist just the same under that legal princi- 
ple — if not mentioned as privileges, so long as they 
were not prohibited in the contract. In other 
words, what is not restricted or forbidden is an 
implied privilege. 

9. The following classification of conditions 
and restrictions of American life insurance com- 
panies will give you a broad view of the subject 
and the reasons for their existence : 

(a) Only a few of the American companies 
accept risks over sixty years of age. Experience 
teaches that many people who have passed the 
productive period of their lives, have allowed them- 
selves to be used as subjects of speculation. There 
is no objection, as a rule, however, for limiting the 
age, if the applicant pays the premium himself as 
a means of investment and a method of increasing 



POLICY CONTKACTS. 51 

his estate. A man would not, if he could, speculate 
on his own life. 

( b ) The majority of companies have a clause in 
their policies that makes them incontestable after 
one or two years. Life insurance companies are 
divided by two points of view on that question. 
One class believes that an applicant should be 
responsible for the truth of his own statements for 
a reasonable length of time — one or two years — and 
thereby save the company — which is but another 
word for policy-holders — the expense of an investi- 
gation; whereas another class believes that the 
incontestable clause should be in force from date 
of issue and that a company should make an inves- 
tigation as to the truth of an applicant's statement 
before the policy is issued and then act accord- 
ingly. Hence, it resolves itself into a question of 
opinion which is better settled by a principle of 
law that — fraud vitiates any contract. In other 
words, where a company reserves the right to con- 
test a policy for mis-statements in event of death 
within a specified time — one, two or three years — a 
court would bar them after the expiration of that 
time from questioning the truth of the statements 
— because the company reserved the right to verify 
them, and if they failed to do so, they could not 
take advantage of their own negligence. On the 
other hand, an incontestable clause from date of 
issuance has but little force except as a talking 
point, because in event of death all a company 



52 THE SCIENCE OF INSUKANCE. 

would have to do to contest a claim would be to 
allege fraud. Hence, the incontestable clause 
reserving one or two years, gives the beneficiary, in 
event of a contest, a better standing in court. 

(c) A majority of companies accept women on 
the same policy forms and rates as men. Some 
charge them an extra premium; others restrict 
them to certain forms of policies ; only a few refuse 
to insure them. Experience confirms that when 
the moral and speculative hazards are eliminated, 
women are as good, if not better risks than men. 

(d) A majority of companies have one or two 
years' restrictions with regard to suicide and 
hazardous occupations. Some companies accept 
applicants in hazardous occupations and charge 
an extra premium in proportion to the risk; 
whereas other companies accept them only on the 
higher premium forms of policies. Experience 
proves that men seldom change from a less to a 
more hazardous occupation, hence these restric- 
tions are gradually being modified or eliminated. 
It is a legal assumption, that a sane man will not 
commit suicide, hence, if a policy-holder commits 
suicide he is insane. An insane man cannot 
commit a fraud, hence a company must pay a 
suicide claim. There is reason to believe, how- 
ever, that there are exceptions to that presump- 
tion, because some men who appear to be rational 
commit suicide, hence we believe that suicide is 
always a subject for judicial consideration. 



POLICY CONTRACTS. 53 

(e) All companies have a clause in their policy 
that it shall not become effective and binding until 
delivered during the lifetime and good health of 
the insured after the first premium has been paid. 
Most companies also attach to the policy a copy of 
the application. Courts have held that it is the 
duty of the applicant to notify a company of any 
change in his physical condition that may have 
occurred between the date of an application and 
delivery of the policy, unless the premium was paid 
and a binding receipt issued at the time of the 
application. When an applicant does not pay the 
premium at the time of the application, he is in a 
position to procrastinate and if he does so — it 
should be at his risk. 

(f) The majority of companies have restric- 
tions in regard to military and naval service in time 
of war. Some companies require an extra pre- 
mium ; others require a permit or scale the claim in 
event of death, and a few have no restrictions. 
Years ago the proportion of men insured to the 
population was so small that this hazard was hardly 
worth consideration, but the proportion of men 
insured to the population is much greater now, 
hence public policy seems to require some restric- 
tive clause covering military and naval service in 
time of war. The continuance of the company is 
the paramount consideration in life insurance, 
hence a wide open policy on some points might 
prove dangerous. 



54 THE SCIENCE OF INSURANCE. 

(g ) The maj ority of companies have no restric- 
tions against intemperance, residence and travel. 
Some companies restrict for one, two or more years 
and a few are constant. The care exercised by 
companies in the selection of risks eliminates 
persons of questionable habits. The improve- 
ments in sanitary conditions eliminate most of the 
residence restrictions. The premium rates are 
higher in the tropics on the same forms of policies 
in order to neutralize the higher mortality of that 
section. 

(h) The majority of companies provide for 
thirty days' grace in the payment of renewal pre- 
miums; also, provide for reinstatement under 
specified conditions in event of lapse. All com- 
panies have some form of non- forfeiture provisions 
after three years — either by way of cash, loans, 
paid-up or extended insurance. The purpose of 
thirty days' grace in payment is to avoid lapse. 
This, however, is a questionable benefit. There 
must be a last day in the payment of premiums, 
hence it may as well be the premium date, as thirty 
days later. Reinstatement in event of lapse is, as 
a rule, subject to re-examination or a medical 
certificate of good health at the applicant's 
expense. Otherwise, men who lapsed and con- 
tracted disease would hasten to revive their 
policies, with an adverse selection operating 
against the company. 

10. Standard Provisions. The majority of 



POLICY CONTKACTS. 55 

States in the United States require in substance 
several or all of the following New York standard 
provisions in all policy forms: 

(I.) The insured shall have substantially one 
month's grace in which to pay the premiums after 
the first year. 

(II.) The policy shall be non-contestable after 
two years from its date of issue. 

(III.) The policy shall constitute the entire 
contract, or, if the application is to be deemed a 
part of the contract, a copy of the application must 
be indorsed on or attached to the policy proper. 

(IV.) If the age of the insured has been mis- 
stated by him, the policy shall, in effect, be for the 
amount which the agreed premium thereon would 
have purchased at the correct age. 

(V.) The policy shall participate annually in 
the surplus of the company, if written by a partici- 
pating company. 

(VI.) The policy shall specify the options to 
which the policy-holder shall be entitled on 
lapsation after three full annual premiums shall 
have been paid. 

(VII. ) The policy shall specify that the policy- 
holder shall be entitled to a loan thereon equal to 
the full reserve, less certain specified deduc- 
tions, after three full years' premiums have been 
paid. 

(VIII.) The policy shall include a table of 
loan values and surrender options available to the 



56 THE SCIENCE OF INSUKANCE. 

policy-holder during the first twenty years of the 
policy. 

(IX.) The policy shall also, in certain cases, 
include a table showing the amounts of instalments 
or annuity payments. 

( X. ) The policy-holder shall be entitled to have 
his policy reinstated within three years after lap- 
sation, on production of satisfactory evidence of 
insurability and the payment of all arrearages with 
interest. 

11. The statute also provides that companies 
may include any other policy provisions more 
favorable to the insured than those above indi- 
cated. 

12. The Best Policy. Life insurance com- 
panies issue a variety of policy forms sufficient to 
suit the wants and conditions of all applicants. 
Some companies report as high as one hundred and 
fourteen different forms of policy contracts to the 
State insurance departments. One policy form, 
however, is the mathematical equivalent of 
another regardless of name — just as 6/12=%, or 
9/12=%; hence, there is no such thing as one 
policy form being better than another from an 
actuarial point of view ; but one policy form is 
better than another from the applicant's point of 
view. In other words, one policy form is better 
than another form just in proportion as it better 
fits the age and circumstances of the applicant. 
When the idea that one policy form is intrinsically 



POLICY CONTKACTS. 57 

better than another is removed from your mind, 
then there remains no motive for you to present or 
advise a prospect to apply for any form of policy 
other than the one best adapted to his age, needs 
and circumstances. 



REVIEW QUESTIONS 

When was the first life insurance contract 
written? Why was it a bet or wager? Why did 
the business of life insurance shift from individuals 
to regular companies? From what and to what 
did the beneficiaries also shift? Upon what is a 
policy contract based? Who is the insured ? Who 
is the beneficiary? Who is the insurer? How 
many parties are there to the contract? A policy is 
evidence of what? What motives govern a policy 
contract? Why are the large variety of policy 
forms issued? Name the three popular forms? Can 
an applicant reserve the right to change the bene- 
ficiary? Can a policy be assigned? What consti- 
tutes the entire contract? What are proofs of death? 
When are policies liable for the debts of the in- 
sured? How are policy contracts interpreted? 
What are the conditions precedent to policy issue? 
On what condition is the insurance continued? 
What is an implied privilege? Why do life insur- 
ance companies, as a rule, refuse to accept risks 
over sixty years of age? Can a life insurance 
company take advantage of their own negligence? 
What rule of law governs privilege in policy con- 
tracts? Is an incontestable clause from date of 
issue stronger than a clause running for three or 
four years ? How do women compare with men as 
insurance risks? Why are hazardous occupation 
restrictions in policies being gradually eliminated? 
What legal assumption arises in event of suicide? 
When does a policy become effective and binding? 



LESSON IV 

THE ART OF PROCURING 
PROSPECTS 



The Art of Procuring 
Prospects 



Prospects 

The Endless-chain and Gross-road methods of 
procuring prospects as taught in this lesson will 
give you the largest average number of applica- 
tions to interviews with the least expenditure of 
time, energy and money — the acid test of all 
methods. Straight canvassing for Ordinary life 
insurance is an expensive and time-wasting 
method. It invites competition ~by leaving the 
tvay open for your competitors to enter the circle 
of your applicants' acquaintance and establish 
business among their neighbors, relatives and 
friends. The conflict of opinion that follows in 
its wake also affords a favorable opportunity 
for competitors to lapse or twist your business. 

1. A prospect in life insurance is any man or 
woman who can get and pay for a life insurance 
policy. There are two classes of prospects — 
doubtful and hopeful. These two classes are 
determined by your method of procuring them. In 
other words, you can interview one hundred 
prospects procured by one method and secure one 
application, whereas you can interview one 
hundred prospects procured by another method 
and secure seventy applications. The number of 
interviews, time and energy expended is practically 



64 THE AKT OF SOLICITING. 

the same in both cases, but the result among the 
hopeful prospects procured by one method would 
be seventy times greater than the result among 
doubtful prospects, procured by the other method. 

2. The elements that differentiate hopeful from 
doubtful prospects and the best method of pro- 
curing them are fundamental truths in the art of 
soliciting. The elements are as follows : 

(I.) Married or Single. Your average number 
of applications to interviews will be higher among 
married men. 

(II.) Occupation. It determines whether or 
not a prospect is eligible for life insurance and it 
indicates his salary and average intelligence. 

( III. ) Health. The higher standard of physi- 
cal, moral and financial risks you select for pros- 
pects, the higher will be your average of approved 
and accepted applications by the company. 

(IV.) Confidence. Your average will be 
higher among prospects who are acquainted with 
you or with some one who is, than among prospects 
who have no direct acquaintance with you, or some 
one who has. There are but few prospects who will 
act on their own judgment in applying for life 
insurance, hence the element of confidence is an 
important one in securing applications. A 
prospect may be ever so hopeful in other respects, 
but if he lacks a favorable acquaintance with 
you or some one who knows you, you cannot as a 
rule secure his application without wasting a great 



THE ART OF PROCURING PROSPECTS. 65 

deal of your time and energy in repeated inter- 
views and solicitations until you develop his con- 
fidence to a point where he will act on your sug- 
gestion. In fact, the element of confidence can be 
developed so strong by our method that prospects 
will often sign an application blank without ques- 
tion, rate or explanation of the policy form. There 
are other elements that help to determine hopeful 
prospects — size of family, financial circumstances, 
amount carried, character, habits, height and 
weight. 

(V.) Age. Ages from 21 to 60, as a rule, are 
eligible for life insurance. The average number 
of applications to interviews are higher among the 
ages ranging from 21 to 41 than among a like 
number of ages ranging from 41 to 60; hence, the 
age of a prospect is an important element. Your 
average will be higher among ages from 21 to 41 
than among older ages because the motive and 
necessity of protection for wives and children are 
greater ; the limited payment plans of insurance are 
better adapted to the younger ages and the 
rates are lower. We do not wish to convey the 
idea, however, that you are not to procure appli- 
cations from prospects who are over 41 years of 
age. On the contrary, procure all the applications 
on good risks that you can. The point we make is 
one of average. It is not good judgment to utilize 
your time and energy interviewing the older ages 
with the law of average operating against you, 



66 THE ART OF SOLICITING. 

unless you have a good reason to believe that the 
prospects will insure. 

3. Method. You can secure some applications 
by any method of procuring prospects. In other 
words, you can nail your proposition on a board 
and fasten it on the back of a mute, and if he 
backed up to enough people, he would procure some 
hopeful prospects at a great waste of time and 
energy, hence a very poor method. The question 
is not what method will procure prospects, but the 
question is wiiat method will procure the greatest 
number of hopeful prospects with the least expen- 
diture of time, energy and expense. It is not 
only necessary to have prospects — men who can get 
life insurance and pay for it — but it is necessary to 
have hopeful prospects, and have them in plenty at 
all times because they are your stock in trade and 
you cannot do business without them any more than 
a merchant could do business without a stock of 
goods. We will now apply the acid test of method 
to some of the common methods used by soliciting 
agents to procure prospects. 

4. Straight Canvassing. This method is a 
house to house, door to door, and office to office 
method, sometimes called " Raw- Soliciting." In 
the application of our test, we refer only to 
straight canvassing for Ordinary and not to Indus- 
trial insurance, which is a different proposition. 
The straight canvassing method is a practical 
waste of time and energy compared with better 



THE AKT OF PEOCUKING PKOSPECTS. 67 

methods. It is solicitation among strangers by a 
stranger to procure prospects, and then ascertain 
by direct interrogations from them whether or not 
their financial, personal and physical history makes 
them hopeful or doubtful. Nine times in ten the 
soliciting agent fails to procure anything except 
that the man will not listen to him, or tell him 
that he has all the life insurance that he wants, or 
slams the door in his face. 

5. If, however, a prospect does lay aside his 
reserve and enter into a detailed statement of his 
personal and family affairs with a strange solicit- 
ing agent, the chances are nine to ten that he will 
not apply for insurance, no matter how hopeful he 
may be in other respects, because the element of 
confidence is lacking. He does not know the 
soliciting agent or any one who does, and lie will 
not put himself to the trouble to investigate, hence 
declines to accept the proposition. This method 
does not meet the test at any point; in fact, we 
cannot conceive of a method of procuring pros- 
pects that could waste a greater amount of time 
and energy. 

6. Other methods advise you to keep your eyes 
and ears open — watch real estate transfers, catch 
the money the seller will have to invest, and sell the 
buyer who bought the property on partial pay- 
ments, a policy to protect his estate in event of his 
death; watch the personal items in newspapers — 
marriages, promotions of salaried men and new 



68 THE ART OF SOLICITING. 

comers in the professions and business circles 
around you. 

7. There is no doubt but what you could pro- 
cure some business by these methods, but you would 
not exist long if you depended on them in the life 
insurance business. They have all the disadvan- 
tages of straight canvassing with the further dis- 
advantage of restricting your field of operation 
and limiting it to the contingencies of these events 
— a method that plunges you in competition with 
soliciting agents of every other company who, by 
virtue of the same method, would have the same 
prospects. These disadvantages could be modified 
some, if you could compel enough people to 
sell property and enough others to buy it on 
time; and if you could compel people to 
marry, or business men to raise the salaries of their 
clerks, or professional men to settle around you 
fast enough to keep you busy. These methods will 
not stand the acid test by giving you the largest 
number of hopeful prospects with the least expen- 
diture of time and energy. We know of but two 
methods that will — one applied to cities and the 
other applied to country territory. 

The Endless-Chain Method 

8. Cities. We will illustrate the city method 
by assuming that you are a stranger in a city. 
Having made all the preliminary arrangements as 
to your contract and territory, you should first 



THE ART OF PROCURING PROSPECTS. 69 

acquaint yourself with the business and residence 
sections of the city, names of streets and avenues, 
locations of the principal buildings, banks, manu- 
facturing plants, churches, parks and monuments 
— all of which will assist you in locating prospects 
without loss of time or inconvenience. 

9. Select a vocational line of men whose salaries 
would enable them to carry $1000 or more life 
insurance. Men who by education or environment 
are easy for you to approach. We will assume for 
illustration that you select a line of compositors 
(printers) , or any one of the many other vocational 
lines found at the conclusion of this lesson. If 
compositors, ascertain the name and address of one 
from a directory or a printing office, call on him 
at his residence, ostensibly to secure his applica- 
tion, and at the close of the interview, ask him to 
give you the names and addresses of a few com- 
positors among his friends and acquaintances in 
the plant where he works, or elsewhere in the city. 

10. He will no doubt reply that he knows of no 
one desiring insurance. Tell him that you will 
ascertain that, all you desire from him is the name 
and address. Having made a memorandum of the 
names and addresses of the prospects he will give 
you, eliminate the doubtful ones, by asking him 
the approximate age of each (you know their 
occupation), whether married or single; ask as to 
their health, marking off those who are in ques- 
tionable health or over 41 years of age. You are 



70 THE AET OF SOLICITING. 

a stranger to the prospects he gives you, but if your 
informant has formed a favorable opinion of you 
and your proposition his influence will operate in 
your favor among them. 

11. You then interview each one of the pros- 
pects he gives you, and whether you procure their 
application or not, ask them at the close of the 
interview to give you the names and addresses of 
other compositors among their friends and ac- 
quaintances. You then eliminate the doubtful 
ones, as you did in the previous instance, and thus 
continue your interviews and prospect-procuring 
until you have a list of one hundred or more as a 
working basis. 

12. If the line you select does not contain a 
sufficient number for a working basis, work one or 
more lines in connection with it. When your 
acquaintance and business are well established in 
one or more of the lines you select, then utilize 
the endless-chain method to procure hopeful 
prospects in all directions. In other words, pro- 
cure among your policy-holders and friends in the 
line you are working, the names and addresses of 
hopeful prospects among their relatives, friends 
and acquaintances in other lines. Then, in turn, 
procure from those prospects the names and 
addresses of others among their relatives, friends, 
and acquaintances, ad infinitum. 

13. The endless-chain method eliminates doubt- 
ful prospects at the time procured and saves the 



THE ART OF PROCURING PROSPECTS. 71 

time and energy otherwise wasted in ascertaining 
by direct personal interviews the fact that this 
prospect is too old, that one is engaged in a pro- 
hibited occupation; this one is single with no 
dependents, that one is in poor health, or the other 
will not insure because he does not know you, or 
your company or any one who does. 

14. It is a physical impossibility to interview 
a prospect procured by the line or endless-chain 
method who does not know you or some one who 
does, hence the element of confidence and the 
current of influence are always operating in your 
favor. The growth and expansion of your busi- 
ness by these methods is limited only by your time 
and strength. If a competitor crosses your line or 
endless chain, the chances in the larger cities are 
that your prospects do not know him or any one 
who does, hence you can invoke their influence and 
bring it to bear in a way that will secure to you 
the application in competition. In other words, 
you are master of the situation. 

15. You must also keep in mind the process of 
elimination that is operating to reduce the number 
of your hopeful prospects. You must maintain 
your full quota by constantly adding to it as a 
working basis; otherwise, your list would soon 
become exhausted. The number of prospects is so 
large in some lines in some cities that it would 
require years to exhaust them, hence the tempta- 
tion will come to you sooner or later to operate in 



72 THE ART OF SOLICITING. 

one line as your acquaintance in that line grows. 
There are many reasons why you should not yield 
to this temptation, but you should branch out, 
sooner or later, with the endless chain among other 
lines and in all directions. If you continue in any 
one line to the exclusion of all others you will limit 
your experience to the boundaries of that line. 
Your highest development comes through the end- 
less-chain method operated in all directions. Your 
growth is limited only by the heights and depths 
of all classes — the horizon of your mind broadens 
and you grow from day to day in experience, which 
is but another name for wisdom. 

16. Country Territory. City prospects are 
compassed in a small area within the corporate 
limits. Country prospects are scattered within 
the limits of a county or state. The city soliciting 
agent can interview any one of a thousand or more 
prospects by the expenditure of a few minutes and 
five cents. The country soliciting agent must 
make a journey to interview his prospects, with the 
expense of railroad fare, livery and hotel bills. The 
endless-chain method, applicable in cities, is not 
the best method to meet the changed conditions in 
country territory. 

17. Counties in an average country territory 
east of the Rocky Mountains in the United States 
have a population ranging from twenty to forty 
thousand. The countjr seat is generally located 
in the centre of the county, with cross-road settle- 



THE ART OF PROCURING PROSPECTS. 73 

ments, villages or cities scattered from four to 
eight miles apart. These county seats and cross- 
road settlements are the religious, educational, and 
commercial centres of the county. The best method 
of procuring prospects in country territory with 
the highest average number of applications and the 
least expenditure of time, money and energy, we 
will name — 

The Cross-Road Method 

18. Having completed your preliminary ar- 
rangements as to contract and territory, when you 
arrive in the county seat of the county you intend 
to work, call on the best liveryman. Tell him that 
you represent such and such a life insurance com- 
pany, and that you wish to hire a horse and buggy. 
Ascertain from him the money crops of the 
different sections in the county and the best cross- 
roads point for you to work first. The liveryman 
is well acquainted with the highways and byways 
of the county ; hence a good source of information. 

19. Select a point that is located more than six 
miles from the county seat, and, before leaving the 
stable, examine your horse, harness and buggy. 
See that the horse is a free and easy driver, with 
good shoes ; see that the harness and buggy are in 
good condition; and that you are provided with a 
good whip, tie strap, storm rug, halter, and lap 
robe. Ascertain whether the horse has any 
"tricks." You will experience much loss of time 



74 THE AKT OF SOLICITING. 

and inconvenience if you fail to assure yourself as 
to the condition of the horse, harness and buggy. 
If a tire on a wheel, or a shoe on the horse, or a nut 
comes off, you may find yourself a long distance 
from a repair shop. The first rain or snow storm 
that overtakes you may catch you without storm 
curtains or rug. If the horse is not a free and easy 
driver, you may find walking easier than "working 
your way" with a whip, or in having your strength 
exhausted by a spirited horse. If you take the 
good qualities of a livery horse for granted, there 
will be many expensive disillusions in store for you. 

20. When you arrive at the cross-roads point 
selected, you will find, as a rule, a doctor located 
there who is an examiner for your company or 
eligible for the appointment. Tell him your 
mission and procure from him a list of the names 
of all prospects who can get and pay for a policy, 
living within a radius of three or more miles. 
List the names in the consecutive order in which 
they live on the various roads. Ask the doctor 
the approximate age of each, occupation, married 
or single, health and financial rating, eliminating 
all the doubtful prospects, and you will have from 
twenty to forty or more hopeful ones. Then try 
to arrange to board by the week with the doctor. 

21. Secure a boy who is acquainted with your 
list of prospects to ride with you. Hand each 
prospect on your list one or more pieces of your 
best literature, stopping only long enough to tell 



THE ART OF PROCURING PROSPECTS. 75 

him that it is in reference to life insurance, and, 
if he applies for a policy, and is accepted, he 
cannot lose anything if he dies, lives, or quits. 
You can circularize the whole list in one or two 
days, and recognize the most hopeful prospects on 
the list by sounding them as easily as you can 
recognize ripe melons in a patch. 

22. Then let the list rest for two or three days, 
and, while they are reading and thinking, you 
drive to the next nearest cross-road settlement; 
procure a list there within a radius of three miles; 
eliminate all the doubtful prospects ; procure a boy 
and circularize them exactly as you did the first 
list. Then go to the next nearest cross-road settle- 
ment, in an opposite direction from your head- 
quarters, and repeat the method. You have now a 
combined list of one hundred or more hopeful 
prospects as a working basis. 

23. If you try circularizing your prospects 
alone over strange and misleading country roads 
depending on guesses or strangers to guide you, 
you will waste a great deal of time. If, however, 
you have a neighborhood boy accompany you, he 
knows them and eliminates the necessity of tying 
your horse whenever you stop. You will meet 
many of your prospects on the road or at a neigh- 
bor's home, that you would otherwise miss by not 
knowing them, with all the loss of time that the 
extra trips to interview them would entail. 

24. Time and Expense. Two of the impover- 



76 THE AKT OF SOLICITING. 

ishing factors in working country territory are time 
and expense. The cross-road method reduces your 
loss of time and expense to the minimum. It will 
give you the largest number of prospects within a 
convenient radius of your boarding place, with all 
the advantages of a permanent over a transient 
rate. You arrest the attention and educate your list 
by one circularizing stroke. You popularize the 
name of your company among your prospects, 
which, from their point of view, is synonymous with 
strength and solvency. They will often argue that 
this or that company is the best in the world, with 
no reason to support it other than the habitation of 
the company's name in their mind. 

25. Your first list will be ready to interview 
while the prospects on the other lists are reading 
and thinking. Suggest to the doctor that it would 
be a convenience to him, the applicants, and you, 
if he could arrange to ride with you and examine 
them as fast as you procured their applications. 
The chances are that he will do so, and make his 
professional calls between your interviews. Begin 
by interviewing the most hopeful prospects 
farthest away on the different roads, working the 
list in a reversed order. Work the other two lists 
in the same way, and thus continue procuring lists, 
circularizing, and working in contiguous territory 
until you have covered the whole county. 

26. When the policies are issued for each settle- 
ment, deliver them, and at the same time procure 



THE ART OF PROCURING PROSPECTS. 77 

the applications of other prospects whom you 
failed to secure at the first interview. Hence keep 
a record of every prospect whose application you 
failed to procure, with name, address, age, occupa- 
tion, married or single, and the reason for not 
insuring. Then work other counties by the same 
method. 

27. Prospects who reside in a cross-roads 
village, live on the beaten path. They have been 
solicited so often by soliciting agents who failed to 
procure their applications that they pride them- 
selves on being insurance proof. By the time you 
have circled around them, they will have had "a 
change of heart." They will know that you have 
procured a good business as well as the applica- 
tions of their friends and acquaintances whose 
financial and social standing in the neighborhood 
is as good as theirs. You have educated the com- 
munity on the subject of life insurance so well that 
the wiseacres in the village find their opinions at 
variance with the best judgment of the com- 
munity — they will capitulate by giving you their 
applications. 

28. Soliciting agents in some of the sparsely 
settled sections in the Inter-Mountain States in the 
United States, where some counties are two hundred 
miles across, and in the Western Provinces of 
Canada will have to adjust the endless-chain and 
cross-road methods to accord with distance and 
population. 



78 THE AKT OF SOLICITING. 

29. Law of Average, The number of applica- 
tions for life insurance procured by you will be 
determined by a law of average. In other words, 
from a certain number of interviews you will pro- 
cure a certain number of applications. Your 
ratio, whether high or low, when ascertained, will 
be your average. This law of average serves a 
double purpose; first, it gives you a basis upon 
which you can calculate your volume of business; 
second, it is a balance wheel that regulates the 
alternating moods that follow success or failure in 
procuring applications. Otherwise, a series of 
successes this week would stimulate your hopes and 
confidence to a point of belief that you could pro- 
cure any one's application, whereas next week a 
corresponding series of failures would prey upon 
your hopes and confidence to a point of belief that 
you would never procure another application. But 
when your average fixes its habitation in your 
mind, it protects you from these alternating 
elations and depressions that so often follow in 
the wake of interviews. 

30. Your average is the ratio between applica- 
tions procured and the prospects interviewed; but 
your volume of business in this month or year is 
not only determined by your average, but by the 
number of interviews you make in this month or 
year. In other words, if your average is five one- 
thousand-dollar applications in one hundred inter- 
views, and the one hundred interviews are pro- 



THE AET OF PEOCUEING PEOSPECTS. 79 

tracted over a period of twelve months, your volume 
of business would be five thousand per year; 
whereas, if the one hundred interviews covered a 
period of one month, your volume of business 
would be five thousand per month, or sixty 
thousand per year. 

31. The endless-chain and cross-road methods 
of procuring prospects will give you the highest 
average number of applications to interviews with 
the least expenditure of time, energy and expense, 
hence it stands the acid test. 

Vocational Lines 

32. Accountants, Actors, Architects, Art 
dealers, Artificial ice manufacturers, Artists, 
Attorneys, Auctioneers, Authors, Automobile 
makers, Bakers, Bankers, Barbers, Blacksmiths, 
Bond dealers and sellers, Bookbinders, Book- 
keepers, Booksellers, Boot manufacturers, Bosses, 
Brass workers, Bricklayers, Bridge builders, 
Brokers, Builders, Burnishers, Butchers, Butlers, 
Butter makers, Button makers, Cabinetmakers, 
Cabmen, Candy manufacturers, Canning factory 
employees, Cap makers, Capitalists, Captains, Car- 
penters, Carpet weavers, Carters, Carvers, 
Cashiers, Caterers, Chairmakers, Chandlers, 
Chauffeurs, Checkers (hotel, etc.), Chefs, 
Chemists, Chiropodists, Cigar manufacturers, 
Civil engineers, Clergymen, Clerks, Clothiers, 
Coachmakers, Coachmen, Collectors, Commission 



80 THE AKT OF SOLICITING. 

merchants, Compositors, Conductors, Confec- 
tioners, Constables, Consulting engineers, Con- 
tractors, Cooks, Coppersmiths, Correspondents, 
Corset makers, Cutters, Dairymen, Dancing 
masters, Demonstrators, Delicatessen proprietors, 
Dentists, Detectives, Doctors, Draftsmen, Dress- 
makers, Druggists, Drygoods merchants, Dyers, 
Editors, Electric light employees, Electric railway 
employees, Electricians, Electroplaters, Electro- 
typers, Embalmers, Embossers, Engineers, En- 
gravers, Ensigns, Envelope manufacturers, 
Erectors, Etchers, Examiners, Excavators, Excise 
agents, Executive officers, Exporters, Farmers, 
Feather dealers, Finishers, Fire adjusters, Fire 
Department employees, Fish dealers, Fishermen, 
Fitters, Florists, Foremen, Forgemen, Founders, 
Fruit dealers, Furnace makers, Furniture dealers, 
Furriers, Game wardens, Gardeners, Genealogists, 
Generals, Gilders, Governesses, Government em- 
ployees, Grain dealers, Grocers, Guards, Guides, 
Gymnasts, Haberdashers, Hardware dealers, 
Harness makers, Hat makers, Horse dealers, 
Horticulturists, Hotel employees, Housekeepers, 
Housewives, Icemen, Illustrators, Importers, 
Inspectors, Installers, Instructors, Interpreters, 
Jailers, Janitors, Japanners, Jewelers, Journal- 
ists, Journeymen, Lastmakers, Lawyers, Leather 
merchants, Letter carriers, Librarians, Lighthouse 
officers, Linotypers, Lithographers, Loan brokers, 
Locksmiths, Locomotive engineers, Lumbermen, 



THE AKT OF PROCURING PROSPECTS. 81 

Machinists, Maids, Mail clerks, Managers, Manu- 
facturers, Masons, Masseurs, Matrons, Merchants, 
Millers, Mining engineers, Ministers, Missionaries, 
Modistes, Motormen, Municipal employees, Music 
dealers, Musicians, Naturalists, Newspaper em- 
ployees, Novelists, Nurses, Oculists, Officers, Opera 
singers, Opticians, Ore dealers, Organists, 
Osteopaths, Painters, Pawnbrokers, Paymasters, 
Perfumers, Pharmacists, Photographers, Physi- 
cians, Pianists, Pilots, Plumbers, Policemen, Post- 
men, Preachers, Presidents, Pressmen, Printers, 
Professors, Proprietors, Provision dealers, Pur- 
chasing agents, Rabbis, Real estate agents, Re- 
porters, Revenue collectors, Roofers, Saddlers, 
Safemakers, Sailors, Salesmen, Sanitarium 
keepers, Sculptors, Seamstresses, Secretaries, 
Servants, Sextons, Sheriffs, Shoe dealers, Silver- 
smiths, Singers, Solicitors, Spinners, Stationers, 
Statisticians, Stenographers, Stewards, Stock 
brokers, Students, Superintendents, Surgeons, 
Surveyors, Tailors, Tanners, Teachers, Telegraph 
and Telephone employees, Undertakers, Wood 
dealers, Writers. 



REVIEW QUESTIONS 

How does straight canvassing for ordinary forms 
of policies invite competition? Define a pros- 
pect. How are prospects classified? Define a 
doubtful prospect. Define a hopeful prospect. 
Define the element that differentiates hopeful from 
doubtful prospects. Has the method of procuring 
prospects any effect on your average number of ap- 
plications to interviews? Can you procure pros- 
pects by any method? Why does the current of in- 
fluence operate adversely when soliciting life insur- 
ance among strangers ? Why is the element of con- 
fidence so important? Between what ages do you 
find the highest average number of applications to 
interviews? Why? Would the law of average 
operate for or against you among ages over 45? 
What is the "acid test" of method in procuring 
prospects? Define the endless chain method of pro- 
curing prospects ? How could you maintain a work- 
ing basis of hopeful prospects? 

Name some of the time and labor saving advan- 
tages of the endless-chain method of procuring 
prospects? How does the current of influence 
operate by that method? Will prospects act on 
their own judgment in applying for life insurance? 
With what should a solicitor in a strange city first 
acquaint himself? Define the cross-road method of 
procuring prospects. How does that method save 
time and expense? How is your average obtained? 
What advantage does the endless-chain method 
give you in competition? 



LESSON V 

THE ART OF APPROACHING 

PROSPECTS : 
WHERE, WHEN AND HOW 



The Art of Approaching 
Prospects 

Where, When and How 

The purpose of this lesson on the art of ap- 
proach and tJ„ following lesson on the art of 
presenting a proposition is to enable a soliciting 
agent to get in, speak briefly and get out with an 
application. This coarse of instruction is based 
on an average size policy, hence this lesson deals 
more directly with the art of approaching the 
industrial class which is fast embracing the mer- 
cantile and professional classes as clerks and 
managers in America. 

1. Preparation. There are two supreme 
moments in the art of soliciting. The first is the 
moment you approach a prospect and the second 
is the moment to secure the application. The word 
preparation cannot be impressed too long or often 
upon your mind, because without preparation you 
cannot make a decent, much less a good approach. 

2. It is in your power to decide whether you 
will flounder in fear and embarrassment during an 
approach and run at the first sign of opposition, 
or whether you will stand with the conscious 
power that preparation gives you. Prospects do 



88 THE AET OF SOLICITING. 

not know what is best for them to do; if they did 
they would come to you for life insurance, instead 
of you going to them. The problem of all ages 
has been to persuade men to do the things they 
should do. The majority of men are going con- 
trary to their best interest every day — wilfully 
blind to the things that are best for them. 

3. Everything moves by force, hence to set a 
man's mind in motion on the subject of life insur- 
ance requires a strong suggestion that appeals to 
his interest. You can not appeal to his interest 
unless you are prepared to hit the "bull's-eye" 
with every shot fired in your statements. The 
first step for a good approach is to master this 
course of instruction and acquire a thorough knowl- 
edge of your policy contracts ; then, make up your 
mind that you are going to make your prospect 
acquainted with your proposition and its applica- 
tion to his needs and circumstances. 

4. You cannot approach prospects with grace 
and ease until you are sure of yourself. You 
cannot be sure of yourself until you are master of 
the science and art of your business. If you know 
and apply the truths we have enunciated, then, 
when you approach a prospect, you will have the 
force of your judgment and conscience behind 
your proposition. Every word you utter will be 
vitalized with truth and inspire confidence. You 
are then sure of yourself, and you enter the pres- 
ence of a prospect with the grace and ease of an 



ART OF APPROACHING PROSPECTS. 89 

enlightened conscience. You have no halting, 
faltering, do-not-know attitude. Your every word, 
move and act proclaim that you know your busi- 
ness. The knowledge you have acquired through 
preparation and practice will endow you with ease 
of maner, fluency of speech, courage and confi- 
dence. 

5. You have a liberty of choice and freedom of 
action as to whom and what class of prospects you 
approach that have no parallel in any other line 
of business. Your independence is a source of 
danger against which you must school yourself in 
the highest of all arts — the art of self-control. 
You should always leave a margin to give and take 
in your course of action during an approach. 
Your interview is a business — not a social func- 
tion. You are approaching prospects at all hours 
of the day, and they are often laboring under all 
kinds of provocation; hence you will find them in 
all kinds of moods. It is true, you may not be 
endowed with that balanced judgment, or self- 
control that enables you to overlook a seeming dis- 
courtesy without resenting it. You must not be 
too sensitive under these circumstances. These 
occasions will furnish you an opportunity to prac- 
tice self-control. 

The Art of Approach 

6. The object of an approach is to make a 
favorable impression and to secure a favorable 



90 THE AST OF SOLICITING. 

hearing. It is not always what a prospect says 
but it is often what he thinks that scores against 
you. The moment you enter his presence he sizes 
you up by your appearance, dress and manner. 
Your dress must be modest, neat and right in every 
detail — the cut of your hair, the style, fit and tex- 
ture of your clothes. Your collar must not be too 
large, too high or too low. It is the misfits and 
soiled linen that attract attention. When a pros- 
pect looks at the heels of your shoes, he has an 
index to your character — keep your heels square. 

7. In matters of style, keep between the two 
extremes — be not the first to wear the new, nor the 
last to lay the old aside. You can afford to be poor, 
but you cannot afford to advertise your poverty. 
The dominant idea that governs dress as applied to 
field work in life insurance is not to distract a 
prospect's attention, excite his envy or criticism. 
In other words, you must not divide his attention 
between your proposition and a flaming necktie, 
freak shoes, loud waistcoat or soiled linen. 

8. Some writers tell us that there is no fixed 
rule or method of approach; other writers tell us 
that it is impossible to lay down a rule that is 
applicable to the diversified phases of human 
nature. They all agree, however, that good 
approach is a question of tact and judgment — 
which is equivalent to saying that the way to get 
rich is to do a large business with a large profit; 
but that does not tell us how to do it. Common 



AKT OF APPROACHING PROSPECTS. 91 

sense tells us that if there is some one place and 
time better than another in which to interview a 
prospect, then there must be a reason; and if 
there is a reason, there must be a rule. Our 
experience agrees with common sense on this point 
and it tells you there is a rule, instantaneous and 
universal in its operation, hence scientific, that will 
tell you the right and wrong time and place to 
approach a prospect. In other words, the applica- 
tion of our rule will tell you instantly, under any 
and all circumstances, whether or not the time and 
place are a favorable opportunity to present your 
proposition. The rule contains but thirteen 
words, hence it is short and easily remembered. 

The Rule 

9. Present the proposition when and where a 
prospect's mind is free and undisturbed. Why? 
Because you should have his whole and undivided 
attention. 

10. Where and When. If you approach a 
prospect while at work, or under the eye of his 
employer, where the nature of his work demands 
his attention, the rule will tell you instantly it is 
not the best time or place. If, however, you 
approach him when not employed — at a time or 
place where some undesirable third person is 
present; or a noise exists to disturb his sense of 
hearing; or an attraction exists to disturb his 
sense of sight; or if pain, heat or cold exists, to 



92 THE ART OF SOLICITING. 

disturb his sense of feeling, the rule will tell you 
instantly that is not a proper time or place. In 
that event, postpone the interview, make a new 
appointment or retreat and call again. In the 
first instance, his mind would be disturbed and his 
attention divided by his work or the presence of 
his employer. In the second instance, his senses 
would be disturbed. The occupation of a pros- 
pect will generally indicate the best probable time 
and place to approach him in accordance with the 
rule. 

11. You will find, as a rule, the home to be the 
best place to interview the majority of the indus- 
trial class of prospects. It places you in close 
proximity with the prospect's wife, mother, or 
father, who are often the final determining factor 
in his course of action. Interviews are frequently 
multiplied by presenting a proposition at a time 
or place where the prospect has to postpone his 
decision to "talk it over" with his wife, mother, or 
father. The best time for home interviews is 
immediately after breakfast, dinner or supper. 

12. Never approach a prospect just before his 
meal time, if you can avoid it, because at that time 
his wife or his mother is usually engaged. It also 
frequently happens that he will give you his 
application on a satisfied appetite, when he would 
not listen to your proposition on an empty 
stomach. Classify your home interviews. Segre- 
gate the prospects who work days to interview 



ART OF APPROACHING PROSPECTS. 93 

nights, and those who work nights to interview 
mornings and afternoons. Arrange your list so 
that your prospects are in as close proximity to 
each other as you can; this will economize on your 
time in going from one to the other. The best 
time to approach the professional and mercantile 
classes will be indicated by their vocation. 

13. How to Approach Prospects. The End- 
less-Chain method of procuring prospects reduces 
the obstacles in your way to a minimum. It elimi- 
nates doubtful prospects; it supplies you with all 
the necessary information as to the hopeful ones. 
They know you personally, or by sight, or by repu- 
tation. The element of confidence is more or less 
established. It is this element that paves the way 
for a favorable interview; it opens the ears and 
mind of your prospect to reason and suggestion, 
and the moment you knock at his door, you are the 
recipient of a fair and courteous consideration. 

14. There are two general ways of approaching 
prospects — direct and indirect. The indirect way 
is to point your conversation or questions in a 
way that the subject of life insurance will either 
present itself then or later when you will have an 
opportunity to disclose your business. We deal 
only with the direct method because it is the 
American method — a method that has built the 
great American life insurance companies. 

15. A direct, business-like way of approach 
is the easiest and the best. Approach a prospect 



94 THE ART OF SOLICITING. 

with confidence and cheerfulness. Be natural and 
courteous. Courtesy is persuasion — if you lack it, 
practice it until it becomes second nature. "To 
be humble to superiors, is duty; to equals, cour- 
tesy; and to inferiors, nobleness." Introduce your- 
self — never hand a prospect your card if you can 
avoid it, because it diverts his attention from you 
to a piece of pasteboard. Do not mention your 
business until you are face to face with him; by 
so doing, the proposition and favorable impression 
you make may counteract and offset any adverse 
opinion or prejudice that may have been in his 
mind. Do not let awe-inspiring surroundings dis- 
tract you — always keep the purpose of your 
interview uppermost in your mind. 

16. You are frequently introduced to a pros- 
pect by his relative or friend. These introductions 
are often momentary and give no time for reflec- 
tion, hence you must act on the spur of the moment. 
The question of shaking hands may flash through 
your mind. The rule is to bow and not shake 
hands. The question as to whether you should 
bow or shake hands is determined by the reason 
for the introduction, and by whom and to whom 
you are introduced. If the introduction is casual 
and as a matter of courtesy, with no evidence of 
premeditation, an exchange of bows is all that is 
necessary; but if you are introduced to his rela- 
tive, a bow might be a chilling response, hence a 
hand-shake would offer a more cordial recognition. 



ART OF APPROACHING PROSPECTS. 95 

17. Strangers. When you approach prospects 
with whom you are not personally acquainted, 
use, in substance, the following introduction: — 
"Mr. Smith, Jones is my name. I have a propo- 
sition I wish to show you. I will detain you but 
a moment." 

18. The points to keep in view are (1) not to 
intimate the nature of your business, if you can 
avoid it, in your introduction, or ( 2 ) fail to suggest 
that you will not worry or "bore" him. If you 
indicate your business by stating in your introduc- 
tion that you "represent such and such a life 
insurance company," or fail to suggest that you 
will detain him but a moment, you are liable to 
strike a discordant note. His prejudice may be 
strong against life insurance, or he may have been 
"bored" by an agent who preceded you. 

19. The introduction we suggest discloses your 
mission, but not your business, and it carries with 
it the assurance that you will not worry or unduly 
detain him. In other words, it quiets his fears 
and disarms him. You can then rely, as a rule, 
upon his courtesy, curiosity, or self-interest to be 
a sufficient motive for inviting you in, or for 
sitting down and listening to your proposition. 

20. The exception to this rule, when you intro- 
duce yourself, will ask: "What is your proposi- 
tion?" Then tell him firmly that you wish to 
show him a proposition from such and such a life 
insurance company. He may then invite you in, 



96 THE ART OF SOLICITING. 

or he may answer that he "does not want any life 
insurance," or that he "has all that he can carry." 
Tell him that he can consult his interest as to that ; 
your mission is to show him the proposition. He 
may answer that "you will be wasting your time." 
Tell him that you will impose no obligations on 
that account if he will do you the courtesy to 
listen a moment to what you have to say. He will 
then do so. 

21. The cause of this prospect's attitude is a 
defective understanding. These defects are not 
permanent; if he is sane, they are easily removed. 
They may be the result of hearsay, or a false idea 
of your contract or company. It has, however, no 
foundation for existence in fact — but his ideas 
control him. A false idea or defect in understand- 
ing has all the force of truth. The moment the 
defect is removed his whole course of action 
changes. He is then, as a rule, as quick to give 
you his application as he was reluctant to give 
you a courteous hearing. 

22. The Hostile Prospect. When a soliciting 
agent with good manners and appearance knows 
his business, the majority of prospects are cour- 
teous and easily approached. The hostile pros- 
pect — whom we rejoice to say is in the minority 
and gradually becoming beautifully less — is one 
of the scientific propositions. You never know in 
advance which one of your prospects he will be, 
hence when you meet him, you have no time to 



AKT OF APPKOACHING PKOSPECTS. 97 

flounder — you have to act quick and with a 
definite purpose in mind. 

23. The moment you meet a hostile prospect — 
one who, for reasons expressed or silent, will not 
give you a courteous hearing, concentrate your 
efforts instantly on the sole purpose of showing 
him your proposition, regardless of what action 
he takes in the matter when you are through. 
Disarm him by telling him that you will not ask 
him to take a policy — all you desire is the courtesy 
of a moment to explain your proposition with no 
obligations imposed; and, when you are through, 
he can consult his own interest as to what he may 
do in the matter. Impress on his mind that it is 
your mission to acquaint him with your proposi- 
tion and that it is his privilege to accept or reject 
it. That will, as a rule, break down his opposi- 
tion. He will invite you in or sit down to hear 
what you have to offer. 

24. The moment he does that, you have passed 
the approach and the moment he is ready to listen 
is the moment for you to begin to present your 
proposition. In other words, when you meet a 
hostile prospect concentrate your efforts in order 
to secure an opportunity to present your proposi- 
tion and the moment you secure the opportunity, 
then concentrate your efforts to secure his signa- 
ture on the application. This method simplifies 
an awkward situation, and it serves as a compass 
to guide your course of action while you meet 



98 THE AKT OF SOLICITING. 

instantly the exigencies of his objections and con- 
trol them with your answers — just as you would 
meet the exigencies of the moment in guiding a 
boat on its course by the touch of your hand on 
the wheel. 

25. Keep in sympathy with a hostile prospect. 
A sympathetic mutual understanding is necessary 
before one mind can influence another. Refusal 
to listen to your proposition or to give you a hear- 
ing is never for the purpose of watching your 
discomfiture. It is not always because a prospect 
is hostile to you or your proposition. Some men, 
especially business and professional men, dislike 
to give their time and attention to any proposition 
that they think is of no interest to them. They 
sometimes want to know the nature of what they 
are going to hear before they will consent to 
listen. Some men will want you to state your whole 
proposition in one sentence, whereas other men 
will give you time to explain your proposition in 
detail. 

26. Ignorance and narrow-mindedness are the 
cause of some hostile prospects; listen to their 
point of view, however much you may disagree 
with it, and then educate them up to your point of 
view. There is a difference between blind and 
intelligent persistency. Never give a prospect 
reason to add a personal dislike to whatever other 
reason he may have for declining to listen to your 
proposition. There is every reason why a prospect 



ART OF APPROACHING PROSPECTS. 99 

should insure and no reason why he should not, 
hence the defects in his understanding are to be 
considered only for the purpose of being removed. 

27. Unapproachable Prospects. You cannot 
size up a prospect by his surroundings. You will 
find many narrow-minded men in palatial offices 
and many broad and liberal-minded men in unpre- 
tentious places. You may have prospects that are 
hard to approach face to face, owing to the 
barriers that surround them in the form of rules 
and clerks. There are three general ways of 
removing these obstacles: (1) by letter of intro- 
duction; (2) by nerve; and (3) by diplomacy. 

28. Nerve. The rules in question are intended 
to govern the rank and file of solictors. They are 
not made for the purpose of repulsing you or your 
proposition — unless you think that you and your 
proposition are of the class for which the rule 
is intended. If you think that your proposition 
will interest and benefit a prospect, then you have 
a moral right to feel that you are not one of the 
class referred to and the rule does not apply to 
you. If you are not in position to secure a letter 
of introduction, you may have to defy interference 
and if you guide your nerve with intelligence, you 
can find a way or make it to meet your prospect 
face to face. 

29. The crux of your approach is the manner 
in which you do it. If you let rebuffs weaken you, 
you? prospect may decide that your proposition is 



100 THE ART OF SOLICITING. 

as weak as your method of approaching him. 
Nerve is but another name for enterprise and 
determination, hence it carries no reproach when 
you use it for a prospect's good. 

30. Diplomacy. If you feel morally sure that 
a face to face interview with your prospect 
depends on the discretion of a head clerk, recog- 
nize his authority and magnify his importance by 
explaining the salient points of your proposition 
to him. Win his confidence, friendship and good 
opinion and you will pave the way for a favorable 
interview with your prospect. It is surprising to 
know how many men are controlled by the advice 
of subordinates. 

31. Country Prospects. The art of approach- 
ing prospects in country territory is the same as in 
cities. The psychological conditions in the country 
are ideal. Country prospects, as a rule, are engaged 
in agricultural pursuits. Any time or place you 
approach them, generally, conforms to the rule; at 
home, on the farm, in the woods, or on the high- 
way. 

32. The idea is prevalent among many country 
soliciting agents that they must preface their 
interviews with more or less social intercourse, 
then spar diplomatically for a favorable oppor- 
tunity to bring up the subject of life insurance. 
This idea is the result of a random method of pro- 
curing business — a method by which many solicit- 
ing agents trade on the generosity of prospects by 



AKT OF APPKOACHING PKOSPECTS. 101 

taking dinner with this one, supper with that one, 
and staying overnight with another one. The 
soliciting agent is conscious in many instances 
that the prospect will make no charge for the 
accommodation. However courteous a prospect 
may be, he often feels a silent resentment in having 
to choose between charging a soliciting agent for 
the service, or contribute without consideration 
towards his maintenance and support. 

33. This method and the feeling it engenders 
are not conducive to the best interests of the 
soliciting agent, prospect, or company. The 
soliciting agent, by this method, becomes the guest 
of his prospect, instead of the representative of 
his company. This random method subordinates 
a soliciting agent's business to the social duties 
and obligations of a guest. It wastes his time and 
opportunities, curtails his number of interviews, 
and lowers his average. You cannot share the 
hospitality of a prospect and at the same time 
present your proposition with the force that cir- 
cumstances may necessitate. 

34. The Cross-Road method evolved in the last 
lesson obviates these disadvantages. You conduct 
your business upon a business basis. It provides 
a permanent boarding place for you within a con- 
venient distance of all your prospects. It puts 
you in position to present your proposition with all 
the force and directness at your command. Your 
contract is the only question involved; there is 



102 THE AET OF SOLICITING. 

no delay, loss of time, or social obligations. 
Whenever the convenience or interest of a pros- 
pect suggests that you dine or remain overnight 
with him, if he refuses compensation, hand a coin 
to his children, or repay him in some other way. 
Make it your rule of action to compensate every- 
one in country territory who renders you a menial 
service, not only as a matter of principle, but as 
a matter of policy. It will be favorably reflected 
in public opinion. 

35. Fundamental Truths. There are certain 
fundamental truths in the art of soliciting life 
insurance that should have a fixed habitation in 
your mind. 

(I.) You are conferring favors — not soliciting 
them. 

( II. ) You have the same right to present your 
proposition to a prospect that he has to decline it. 

(III.) Maintain the respect of your prospect, 
with or without his application — you can afford 
to lose his business, but you cannot afford to lose 
his confidence. 

( IV. ) Eliminate all appearance of your pecuni- 
ary interest in the transaction and predicate your 
suggestions, arguments and course of action upon 
the interest of your prospect. 

(V.) Never approach a prospect by asking him 
if he is busy? The question suggests to his mind 
that your proposition is not worth his attention 
unless he has nothing else to do, and that you are 



AET OF APPROACHING PROSPECTS. 103 

willing to wait. Never tell him that he must or 
ought to insure. He resents the "must" and the 
fact of your approaching him on the subject of life 
insurance implies that you think he "ought" to 
do so. 



REVIEW QUESTIONS 

Name two supreme moments in the art of solicit- 
ing. Why is preparation essential to a good ap- 
proach ? Why do prospects have to be solicited for 
life insurance? What is required to set a man's 
mind in motion on the subject of life insurance? 
What must you know before you are in a position 
to appeal to a prospect's interest? With what 
should every word you utter be vitalized? What 
should your words and acts proclaim? Why is your 
independence a source of danger? What is the 
object of an approach? What often scores against 
you? What dominating idea should govern solici- 
tor's dress? Is there any fixed rule governing an 
approach? Where and when can you apply the 
rule ? 

How should you classify your interviews? What 
advantage does the Endless-Chain method give you 
when approaching prospects? How does confi- 
dence pave the way for favorable interviews ? Name 
two methods of approaching prospects? Define 
them. Which is the American method? How 
should you introduce yourself to prospects? What 
is the rule in reference to shaking hands? Name 
and define two points to keep in mind when intro- 
ducing yourself to a prospect. What is the cause 
of a hostile prospect? What should be your sole 
purpose the moment you meet a hostile prospect? 
What indicates the moment you pass the approach ? 
Why should you keep in sympathy with prospects ? 



LESSON VI 

THE ART OF PRESENTING 
A PROPOSITION 



The Art of Presenting a 
Proposition 



The signature of a prospect is the climax of 
your effort in the Art of Presenting a Proposi- 
tion. The dominant purpose of the last lesson 
was to secure an opportunity to present your 
proposition — the dominant purpose of this lesson 
is to secure the application. 



1. The first supreme moment in the art of 
soliciting is the moment your prospect is ready to 
listen to your proposition. That is the moment to 
come direct to the point by asking him his age, 
which we will assume to be 35 years, and we will 
assume your proposition to be a Twenty Payment 
life contract. Begin by saying: 

(I.) Mr. Smith, the moment you receive 1000 
or more dollars insurance in this company, you 
have added 1000 or more dollars to your estate. 
That is the best piece of property that you can own, 
because if you die it is cash, and if you live you 
pay no direct taxes on it. It is the only way you 
can add 1000 or more dollars to your estate by the 
stroke of a pen. 

(II.) You will deposit $37 (or $80, if non- 
participating) once a year for twenty years, if you 



110 THE ART OF SOLICITING. 

live j just the same as you would deposit it in a 
bank. If you die during this period,, the company 
will pay the $1000 to your family The premium 
is fixed at your present age and guaranteed never 
to increase. 

(III.) If you live twenty years, your deposits 
cease. In other words, you quit and the company 
gives you your choice between $1000 paid-up 
for life, or $610 in cash. The policy works both 
ways — it provides for your family in event you die, 
and it provides for you in event you live. If 
misfortune overtakes you during the period, there 
is provision in the policy to meet it. 

(IV.) When you have made three deposits, the 
company guarantees to extend the face amount of 

your insurance for in event of non-payment 

of premium and to pay the claim in event you die 
during the extension; or (V.) a paid-up value; or 
(VI.) a loan or cash value. 

2. In other words, in consideration of the three 
annual premiums, the company guarantees to pay 
your family $1000 in event of your death any 
time during the three years; or, if you wish to quit, 
the company guarantees to give you $50 (more or 
less) in a paid-up policy for each annual deposit 
you have made. Every time you deposit $37 
the company guarantees $1000 to your family 
in event of your death that year, and in addition, 
guarantees $50 if you quit in a paid-up policy, or 
guarantees to loan you a specified amount of 



AET OF PKESENTING A PKOPOSITION. Ill 

your deposits without interfering with your in- 
surance. 

3. You have then mirrored the salient points of 
the proposition on his understanding. Now clinch 
them by appealing to his reason. 

Mr. Smith, if you insure, you must do one of 
three things in twenty years — die, live, or quit. 
If you die, you would leave the $1000 to your 
family; if you live, you will have made a good 
investment, and if you quit after three years you 
cannot lose anything. 

4. That cuts the ground from under him 
and you know that if you fail to secure his appli- 
cation, it will be through no fault or misunder- 
standing of the contract. If your prospect can 
carry more than $1000, tell him that you use 
$1000 as a basis to figure on, and when you are 
through you will multiply it by as many thousands 
as he desires. 

5. If he should interrupt you with a question 
on some point out of its logical order, defer your 
answer until you have reached that point or until 
you have finished your proposition. In other 
words, do not permit a prospect to break the con- 
tinuity of your presentation. If your presenta- 
tion is clear, he will listen in silence. If he should 
interrupt you with a question about any one of 
the six features presented, it is notice that you 
have failed to mirror that point on his understand- 
ing; hence, be more careful in the future. The 



112 THE AET OF SOLICITING. 

art of presenting a proposition is the art of photo- 
graphing its benefits and privileges on his under- 
standing so that he will see them exactly as you 
see them. The clearness and force with which you 
transfer these features from your mind to his will 
measure the strength of his conviction. 

6. The moment a prospect is ready to listen, 
you should keep in view the following points : 

(I.) Remember that he will not buy a policy 
contract that he does not understand; if he does, 
he will lapse it. 

(II.) Remember that an}^ one of your many 
policy contracts is a complex proposition — full of 
benefits, options and privileges that a layman can- 
not easily grasp if they are all hurled at him in a 
mass, and especially during the brief time and 
under the adverse circumstances that you often 
have to present them. You should reduce the 
proposition to its simple terms in order to bring it 
within the compass of a quick and easy understand- 
ing. In order to do this, segregate the features of 
the policy contract in two classes — major and 
minor. Present only the six major features: (1) 
the amount; (2) the premium; (3) the result in 
cash or paid-up insurance; (4) the extension; (5) 
the paid-up value, and (6) the loan value. 

Reserve the minor features to present when you 
deliver the policy and by so doing you fortify your- 
self in two directions : You take no chance on con- 
fusing him and losing him when you present the 



AET OF PKESENTING A PKOPOSITION. 113 

propostion; and, when you go to deliver the policy, 
if you find your applicant laboring under a false 
impression, you are in position to show him the 
additional options, benefits and features as 
evidence that the policy contract is better than you 
represented. You restore his confidence. His 
moral nature will assert itself and you should 
deliver the policy. 

(III.) Remember that there are two avenues 
to a prospect's understanding — the eye and the 
ear. Men remember better what they see than 
what they hear, hence you should use both the eye 
and the ear to reach the understanding. If the 
ear fails to catch it, the eye will. For this purpose 
use the following diagram with card and pencil 
during the presentation. 

7. DIAGRAM. 



(i) 
$1000 Jl ( $1000 Paid-up 



$37 y rS . I 



(2) 



$610 Cash 



3d. yr. — Extension; Paid-up; Loan 

(4) (5) (6) 



8. If your prospect has a quick perception it 
will require only a moment to mirror the major 
features on his understanding; if he is slow of 
perception, it will require a little more time. 

9. When you explain the premium, always use 
the word deposit — never use the word pay. The 



114 THE AKT OF SOLICITING. 

premium comes back to the policy-holder at death, 
maturity or in one of three ways after three years. 
When you use the word "pay" you create a false 
impression and associate the premium in the mind 
of a prospect with money spent; when you use the 
word "deposit" you create a truthful impression 
and associate the premium in the mind of the 
prospect with money saved. 

10. Leave the loan or cash value for the sixth 
and last point in the logical order of presentation. 
By so doing, the prospect will be so well pleased 
with the equity and fairness of the policy contract 
that the question of difference between what he 
deposits and what he would draw in cash, in 
event of lapse, will not arise; whereas, if you 
present the loan or cash value second, third or 
fourth in the order of presentation, you will start 
him at once to figuring the difference between what 
he deposits and what he would draw in cash if he 
quit — then you may have to make an actuary out 
of him before you can secure his application. 

11. At the conclusion of your presentation, you 
have reached the second supreme moment in the 
art of soliciting — the time to secure the applica- 
tion. During this moment you should keep in view 
two fundamental truths : 

(I.) Types. Remember that your prospect 
will instantly classify himself by his course of 
action into one of ten stock types of men. 

(II.) Consent. Remember that if your pros- 



AET OF PEESENTING A PEOPOSITION. 115 

pect consents to apply for a policy, he will indicate 
his consent in one of two ways — expressed or im- 
plied. 

12. There is but one prospect in ten, on an 
average, who will give you an expressed consent to 
take a policy during a first interview. If you 
secure his application, you will do so nine times 
in ten on an implied consent. If you do not know 
an implied consent when indicated there is no 
alternative for you except to multiply interviews 
until you procure an expressed consent when you 
may have had an implied consent the first inter- 
view, had you recognized it, and thereby saved all 
the waste of time and energy spent in back-calls. 

13. The first interview is the best of all inter- 
views. You have more power over a prospect the 
first interview than you will ever have again. The 
more you hammer a nail after it has been driven 
— the looser it becomes. The more you repeat your 
proposition and arguments after they have once 
been presented — the weaker they become. By 
keeping these points in view, you will have an 
equilibrium of feeling during the interview. You 
will know before you see your prospect that he is 
but one of the ten types of men. You will know 
the full range of his course of action. He cannot 
surprise or disconcert you during the interview. 
The only thing he can do will be to disclose his 
type. You will also know that the chances are only 
one in ten that he will give you an expressed con- 



116 THE AKT OF SOLICITING. 

sent during the first interview; if you procure his 
application the chances are nine to ten that you will 
have to do so on an implied consent. 

14. The moment a prospect consents — ex- 
pressed or implied, you should make the interval of 
time between his consent and his signature as short 
as possible. Reverse the order of questions on the 
application blank so as to begin with the questions 
that you do not know the answer to — such as the 
date of his birth, place, county and state. When 
you have completed these questions, tell him, as a 
matter of form, that he must also answer the 
questions that you do know the answers to — such 
as city, street, county, state, etc. Otherwise, if 
you begin first by writing the answers to the ques- 
tions you know, your prospect will be silent during 
the interval, but when you are ready to ask him 
the answers to the questions you do not know, he 
may reply that he has changed his mind. During 
the interval of silence, an adverse thought entered 
his mind and reversed his decision. 

15. A prospect can think of but one thing 
at a time, hence the moment he consents you should 
shut out of his mind the opportunity for adverse 
thoughts to enter by reversing the order of ques- 
tions so as to keep his mind occupied with 
the answers. Then hand him the pen and show 
him where to write his name in full — never use the 
word sign. If an adverse thought arises in his 
mind after you depart, you can, as a rule, rely on 



AKT OF PRESENTING A PROPOSITION. 117 

his moral nature to overcome it. In other words, 
you should protect him from himself. When he 
gives you his consent — expressed or implied — to 
make application for a policy, he is discharging a 
moral duty. It then becomes your moral duty to 
arrange the order of questions so as to occupy his 
mind with the answers in a way that no adverse 
thought has time to enter and upset a good 
resolution. 

The Psychological Moment 

16. The moment you finish presenting the prop- 
osition by stating that, if he insures he will die, 
live or quit — cease talking. Your prospect will 
then immediately classify himself by his course of 
action into one of the following ten types of men. 

The First Type. The first type will give you 
an expressed consent by saying: that he will take 
1000 or more dollars, or that you can write him up 
for 1000 or more dollars. That is the psychological 
moment to draw the application without adding 
another word; proceed with the questions and. 
when the answers are completed, hand him your 
fountain pen and show him where to write his 
name in full. Then make an appointment for the 
examination and bid him good-day. 

The Second Type. The moment you finish 
explaining your proposition, the chances are that 
your prospect will be silent. His silence indicates 
that he understands the proposition, but it does 



118 THE AKT OF SOLICITING. 

not indicate what his course of action will be in 
reference to it. His silence may be caused by any 
one of several reasons according to his type ; hence 
you will have to break his silence in order to dis- 
close his type, then you will know how to proceed 
to secure his signature. If you wait until he 
speaks, he will not speak until he has thought of 
every reason for procrastination. You must not 
gives these adverse thoughts time to arise in his 
mind, hence you must break his silence instantly 
and do it in a way that will not provoke discussion 
or impose any obligations. Do so with the follow- 
ing question: 

Mr. Smith, if you took a policy how much would 
you take? 

He may answer that one thousand dollars or 
more will be as much as he can carry. That is an 
implied consent, hence the psychological moment 
to draw the application without adding another 
word; proceed with the questions and, when the 
answers are completed, hand him the pen and show 
him where to write his name in full. Make an 
appointment for the examination and bid him 
good-day. 

The Third Type may answer that your proposi- 
tion looks "too good to be true." The analysis of 
a premium at age 35 will remove this defect from 
his understanding and convince him that it is not 
only true, but a mathematical certainty. If he 
lapses into silence, it is the psychological moment 



ART OF PRESENTING A PROPOSITION. 119 

to draw the application, proceed with the ques- 
tions, then hand him the pen as previously indicated. 

The Fourth Type may answer that he does not 
believe in life insurance, which is equivalent to 
saying that he does not care what becomes of his 
family in event of his death ; or, he may be a mono- 
maniac on some form of investment or method of 
savings that puts him beyond the reach of reason. 
That is the psychological moment to close the inter- 
view and bid him good-day. 

The Fifth Type may answer that he wishes to 
talk it over with his wife. Suggest that he make 
an appointment that you may be present. If this 
does not suit his convenience, suggest that he give 
you his application and be examined; in the mean- 
time he can talk it over, and, when the policy is 
issued, you bring it to him with no obligations 
imposed. If he is in earnest he will agree to do 
so, or lapse into silence, which is an implied con- 
sent; draw the application and proceed as previ- 
ously indicated. 

The Sixth Type may not answer you. Draw 
the application and proceed with the questions. 
If he refuses to answer them, his silence may indi- 
cate a hidden reason that he does not wish to 
disclose. It may be that he has been married 
twice and has two sets of children, or it may be that 
he is sensitive about the examination. In either 
event, it is better to ascertain the reason by antici- 
pation or suggestion, rather than by direct inter- 



120 THE AKT OF SOLICITING. 

rogatories. In other words, suggest to him that the 
examination questions are only about his family 
history and what illness he may have had, requir- 
ing but a few moments, and that he can make the 
policy payable to his estate, if he wishes, subject 
to his will. This may disclose the reason for his 
silence ; draw the application again and proceed. 

The Seventh Type may answer that he cannot 
afford to carry any more life insurance, or that he 
has all that he wants, which may or may not be 
true. You must decide which by the amount and 
form of insurance that he carries, and by what 
you know of his circumstances. If it is a pretext, 
ignore it. If the application hinges on the ques- 
tion of immediate payment of premium, tell him 
that you can hold the policy for thirty days, or 
that you will divide the annual premium into two 
or four payments, either three or six months apart 
(semi-annually or quarterly). If he hesitates, or 
the application hinges on the premium becoming 
due and payable in a certain month, tell him that 
you can bridge him over the intervening period 
with a term rate, covering his protection during the 
interval, thereby making his annual premuim fall 
due in the month desired. If he consents or lapses 
into silence, draw the application and proceed. 

The Eighth Type may answer that he is un- 
decided whether to take one or two thousand 
dollars, which is an implied consent to accept the 
smaller amount, hence the psychological moment to 



AKT OF PKESENTING A PKOPOSITION. 121 

secure the signature. Draw the application, tell- 
ing him that you will talk the amount over with 
him in a moment and proceed with the questions 
and answers. You now have his application for 
one thousand dollars and you have eliminated all 
other questions except the one of amount. Advise 
him to make it two thousand dollars, because his 
rate is less than it will ever be again. If he indi- 
cates that he is still undecided, suggest that you 
make it two thousand dollars, and that you will 
request the company to issue it in two policies of 
one thousand dollars each. Tell him that when 
the policies are issued, he can accept both, or, if 
necessary, you will return the extra policy for can- 
cellation. The chances are that he will agree to 
this suggestion. 

The Ninth Type may answer that he is un- 
decided. If he approves, but hesitates, you may 
catch the implied consent on the wing by drawing 
the application and proceeding with the questions. 
If he still hesitates, refresh his memory by review- 
ing the proposition, and if necessary you may add 
an explanation of some of the other benefits and 
privileges. If he then indicates his consent or 
lapses into silence, it is the psychological moment 
to secure the signature. 

If, however, he again hesitates, lay the blank 
aside and appeal to his reason with the following 
argument : 

Mr. Smith, how long would it take you to save 



122 THE AKT OF SOLICITING. 

one thousand dollars at the rate of $37 per 
year? It would take you more than twenty years 
and you have no assurance that you will live to do 
it? If you take the policy, you will create one 
thousand dollars immediately in event of your 
death that would require more than twenty years 
for you to save at that rate if you live. In other 
words, by taking the policy you secure the thousand 
dollars whether you live or die. If this argument 
fails, then ask him to tell you frankly what stands 
in his way ; or, leave the question open for a future 
interview by telling him to think it over and you 
will see him again. 

The Tenth Type may be the hostile type ; he will 
answer by telling you frankly the reason he does 
not want to insure. The reason may be in con- 
nection with your company or contract. He may 
tell you that Mr. Blank was insured in a company 
that failed or that he died and the company refused 
to pay the claim. It is safe to assume that there 
is no analogy between the company he has in mind 
and the company you represent. On the contrary, 
the chances are that the company Mr. Blank was 
insured in was an assessment concern, promising 
to make one assessment in the event of a member's 
death and the amount realized would be paid as a 
benefit not to exceed the face of the policy. In 
other words, the assets of the concern were in the 
pockets of the members and the concern agreed in 
event a member died to pass the hat around; 



AKT OF PRESENTING A PROPOSITION. 123 

whereas a policy in your company guarantees the 
face amount immediately in event of death and the 
assets are in the treasury. 

If Mr. Blank had exercised as much discretion 
in buying life insurance as he would have done in 
buying a horse, he would have been insured in a 
company like the one you represent. Or, he may 
tell you Mr. Blank had just matured a policy "like 
yours" in some company and he did not receive as 
much money as they promised him when he 
insured. He evidently refers to a deferred divi- 
dend contract. If your proposition is an annual 
dividend, guaranteed dividend, mortuary dividend 
or a non- participating, you can explain the 
difference between it and the one in question. Tell 
him that the results at the end of twenty years 
are all guaranteed in your contract. Tell him that 
the company no doubt paid Mr. Blank all that was 
due him, otherwise he would have sued them and 
recovered it. The point at issue is the difference 
between the "estimated" and actual deferred 
dividend. The estimate was an illustration of 
what the dividend was expected to be when the 
policy matured, hence it was based on the past 
experience of the company, whereas the actual 
dividend was paid on a future experience. 

17. Mental Science. In order that you may 
better understand the art of presenting a proposi- 
tion, it is necessary that you should know two or 
three elementarv truths in mental science. 



124 THE AKT OF SOLICITING. 

The brain of a prospect is an organ of reason 
and understanding. Understanding deals with 
percepts, which are mental images of the various 
features of your contract. Reason deals with con- 
cepts, which is a word under which Reason groups, 
compares and unites the various features of your 
proposition, accepting or rejecting them in accord- 
ance with its conception. Hence correct under- 
standing is essential to correct reasoning. In the 
application of these truths you must present each 
feature of your proposition in a distinct manner, 
allowing sufficient time for the impression to be 
mirrored on the understanding. 

18. There is no defect, as a rule, in a prospect's 
reason. If his course of action is adverse, it is 
because his understanding is defective. In other 
words, the premises on which he reasons are false. 
Correct his understanding and you immediately 
change his course of action. These defects are 
often illustrated by your personal experience. You 
may be walking along a highway and see a 
serpent lying across your path. You will recoil, 
or procure a stone, as your safety may indicate, 
until you discover that it is riot sl serpent but a 
stick. In other words, when you first saw the 
stick the mental image, or percept, was that of a 
serpent — a defect in your understanding. There 
was no defect in your reasoning because your 
course of action was justified; but the moment the 
defect was removed your course of action changed. 



REVIEW QUESTIONS. 

What is the climax of your effort in the art of 
presenting a proposition? What is your dominant 
purpose during an approach? What is your domi- 
nant purpose in this lesson? What should you do 
the moment a prospect is ready to listen to your 
proposition? Name six salient points in a policy 
contract. Name the order in which you should 
present the salient points. How would you clinch 
the points after mirroring them on the understand- 
ing? Would you permit a prospect to interrupt 
the continuity of your presentation? If not, why 
not? How would you measure the strength of a 
prospect's conviction? Name and define three 
points that you should always keep in mind the 
moment a prospect is ready to listen. When is 
the second supreme moment in the art of soliciting? 
Name and define two points that you should keep 
in mind the moment you finish presenting the 
proposition. 

Name and define the two methods of consent. 
The moment a prospect consents to make applica- 
tion what should you do? Why do you reverse the 
usual order of questions on the application blank? 
Name and define the different types in which pros- 
pects classify themselves the moment you finish 
presenting a proposition. When a prospect con- 
sents to make application for a policy, why should 
you control his thoughts? Why is the first inter- 
view the best of all interviews? 



LESSON VII 

THE ART OF DELIVERING 
POLICIES 



The Art of Delivering 
Policies 

If the only question involved in delivering 
policies was the collection of the premium in 
exchange for the official receipt, there would ~be 
no question of art. It happens, however, that 
there are other questions involved, if you wish 
your business to renew; if you wish to hear no 
complaints, and if you wish to retain the good- 
will and confidence of your applicants. 

1. The time and place to deliver policies are 
governed by the same rule that governs the time 
and place to present a proposition — in other 
words, where the mind and senses of your appli- 
cant are free and undisturbed. Your method of 
procedure must follow the order in which you 
presented the major points of the proposition 
when you procured the application. It is as fol- 
lows : — 

(I) Read and explain to your applicant the 
face of his policy, which was the first major 
feature you explained when you presented the 
proposition. 

(II.) Read and explain the premium — where, 
when, and how to remit it. 

(III.) Read and explain the options at the 
completion of twenty years. 



130 THE AKT OF SOLICITING. 

(IV) Read and explain the extension feature 
and how it operates after three years. 

(V.) Read and explain the paid-up value after 
three years — when and how paid. 

(VI.) Read and explain the loan value, which 
was the sixth and last major feature you explained 
when you presented the proposition ; then read and 
explain all of the minor features your policy 
may contain, such as grace in the payment 
of premiums, dividends if participating, in- 
contestable, unrestricted benefits and privi- 
leges. 

2. Tell your applicant the name of the policy. 
If it is a twenty-payment life, tell him it is not an 
endowment, nor an ordinary life, nor any one of 
many other plans issued by your company ; but the 
name is — a twenty payment life. Tell him to write 
or come to you if a competitor ever tries to twist 
or dissatisfy him. Tell him that your company 
carries a full line of policies; hence it will never 
be necessary for him to go elsewhere when he 
wishes to increase his insurance. Then procure 
your settlement in exchange for the policy and 
official receipt. 

3. If you deliver a policy without reading or 
explaining it, the applicant accepts it by faith. 
He may believe that it contains all of the benefits 
and privileges that you represented, but he does 
not know it. When you read and explain the 
policy on delivery, he then knows it. The policy 



THE ART OF DELIVERING POLICIES. 131 

then confirms all of your representations when you 
procured his application. You have refreshed his 
memory on the salient points. You have planted 
each and every feature of the policy deep in his 
understanding. You have fortified him against 
the adverse contingencies of the future that are 
sure to arise, sooner or later. 

4. If your applicants on receipt of policies, 
filed them away, never to be read, seen, or men- 
tioned again until maturity or death, then you 
could deliver them by faith. But that is not the 
history of life insurance policies. On the contrary, 
the applicant, sooner or later, will read the policy. 
It may be just before he pays the next premium; 
it may be after an argument with a friend over 
the respective merits of their contracts, or it may 
be when some competitor tries to twist him. When 
he does read it, however, the chances are close to 
a mathematical certainty that he will not under- 
stand it. 

5. The salient points of the contract are 
expressed in terse, legal phrases that do not stand 
out as clear in his mind as they did when you 
presented them in simple terms. He will fail to 
grasp the meaning of this expression, or the 
arrangement of that feature. He will finally jump 
at the conclusion that you misrepresented the 
policy. The funny part is that, under these cir- 
cumstances, he will seldom, if ever, come to you 
for an explanation. He will multiply correspon- 



132 THE AET OF SOLICITING. 

dence over technical points with your manager or 
company that are always hard to explain by corre- 
spondence ; or he will circulate his grievance among 
his friends and acquaintances, who are your pros- 
pects or policy-holders, or he will lapse the 
policy. The chances are that he will do all 
three of these things, to the detriment of all 
concerned. 

6. The popular impression is that all twenty- 
year policies are endowments. Applicants with 
a twenty-payment life, or an ordinary life with a 
twenty-year distribution, will often refer to them 
as endowments. Their course of action does not 
indicate that the policy was misrepresented, nor 
does it indicate that the applicant understands 
the comparative difference in policy plans. It 
simply indicates the applicant's ignorance of 
policy names. Hence this difference in names 
should be explained when policies are delivered; 
otherwise, a misunderstanding is liable to arise, 
and the policy lapse under a false impression that 
it is a twenty-payment life and not an endow- 
ment, or because it is an endowment and not a 
twenty-payment life. For the sole purpose of 
impressing the necessity for fortifying your appli- 
cants on this point, we will illustrate how easily 
endowments are twisted if not properly 
delivered. 

7. We will assume, for illustration, that your 
applicant is thirty-five, and his endowment three 



THE AET OF DELIVERING POLICIES. 133 

years old. Your competitor meets him and tells 
him that he made a serious mistake in the selection 
of his plan of insurance. In other words, he should 
have taken a twenty-payment life policy. He tells 
him that the cash he will receive at the end of twenty 
years is based on the amount of his premium, 
and not on the name or the amount of his 
policy. 

8. He tells him that the premium on a $1500 
twenty-payment life policy at his age is approxi- 
mately the same as the premium he is now paying 
on a $1000 twenty-year endowment. He tells him 
the cash guaranteed on the $1500 twenty-payment 
life policy at the end of twenty years is approxi- 
mately the same as the cash guaranteed on his 
$1000 endowment, whereas, in event of death, the 
twenty-payment life would pay him $1500, instead 
of $1000 on the endowment. 

The applicant then, naturally, wonders why you 
failed to mention these facts. Your competitor 
replies that you worked for a commission. In 
other words, the premium on a $1000 endowment 
is higher than the premium on $1000 twenty-pay- 
ment life. The applicant sees the point, and his 
confidence in you is destroyed. 

9. We will assume, however, that you are 
present at the interview to defend your policy. 
You would tell your applicant that the partici- 
pating premium on $1500 twenty-payment life 
standard form policy, is $55 per year, or $5 



134 THE AKT OF SOLICITING. 

more than the $50 he now pays on the endowment. 
You would tell him that the guaranteed cash value 
at the end of twenty years on the $1500 twenty- 
payment life policy is only $915, instead of $1000 
on the endowment. In short, the twenty-payment 
life policy only guarantees the face at the end of 
twenty years in a paid-up policy, whereas the en- 
dowment guarantees the face in cash. 

10. Your competitor smiles. He tells the appli- 
cant that the difference mentioned is correct, but 
he will fully compensate him for it. In the first 
place, he will give him $500 more protection, which, 
added to the $150 paid-up policy he will receive 
if he surrenders the endowment at the end of 
three years, would give him, in event of death, 
$1650, whereas his family would otherwise receive 
only $1000 on the endowment. In the second place, 
if he lives twenty years, the $150 paid-up policy 
will mature in cash, which, added to the $915 
guaranteed on the twenty- payment life, would 
give him a guaranteed cash value of $1065, or $65 
more than the endowment. In the third place, if 
he is sick or in poor health at the end of twenty 
years, the twenty-payment life guarantees $1500 
paid-up for life, without medical examination, 
whereas he would have to draw the $1000 
in cash on the endowment and surrender the 
policy. 

11. Your competitor tells him that the word 
endowment is simply a name to distinguish one 



THE ART OF DELIVERING POLICIES. 135 

policy plan from another. He tells him that the 
only sense in which one policy is better than another 
is the sense in which one policy fits the age and 
circumstances of an applicant better than another 
policy. He tells him that the word endowment 
does not necessarily mean $1000 at a certain date. 
The word endowment may be applied to any 
amount. In other words, the $915 guaranteed at 
the end of twenty years on the $1500 twenty-pay- 
ment life policy is as much of an endowment for 
$915 as the endowment policy is for $1000, or any 
other amount. The question now involved in the 
mind of the applicant is not, do the actuarial facts 
in the comparison sustain your competitor's conten- 
tion, but do the guarantees on the face of the two 
policies confirm his assertions ? 

12. Our methods of procuring prospects in city 
and country territory enable you to procure 
all the information you need for the selection of 
a plan that is best adapted to the age and circum- 
stances of your prospects without mentioning any 
other plan at the time you present your proposi- 
tion. A life insurance soliciting agent who sells 
an endowment policy to an applicant who should 
have a twenty-payment life, or vice versa, will 
hold his position and applicants just about as 
long as a clothing salesman would who sells a 
No. 50 coat to a customer who should have a No. 
36. Misfits in life insurance, like misfits in cloth- 
ing, breed dissatisfaction. 



136 THE ART OF SOLICITING. 

13. The time required to deliver a policy is 
only a few moments, but the art of doing it in a 
way that will fortify the applicant against the 
adverse contingencies of the future must be exer- 
cised with the same care that you would exercise 
in planting a tree — if you expect it to survive. 
The art of delivering policies, in its last analysis, 
is the art of preserving the confidence, influence 
and business of your applicant. 

THEORY AND PRACTICE 

Methods 

14. As a supplement to this lesson, we will add 
a brief review of our theories on the art of 
soliciting, by giving you a concrete demon- 
stration of their force and effectiveness in 
practice. 

In the evolution of field work, you will procure 
applications from three sources. The first source 
will be applications procured from prospects 
during your first interview on the line or endless 
chain. The second source will be applications 
procured from prospects on the deferred or back 
calls. The third source will be applications pro- 
cured from prospects through the collateral 
influence of policy-holders and friends. The ratio 
of applications to interviews from the three 
sources combined will be your average. All the 



THE ART OF DELIVERING POLICIES. 137 

applications procured from back calls and 
collateral influence in towns and cities follow in 
the wake of your initial work. In other words, 
the number of applications you procure from 
back calls and collateral influence will be in pro- 
portion to your number of hopeful prospects, 
policy-holders and friends. 

15. The best test of method is by a stranger in 
a strange city without prestige, friends or acquaint- 
ance. Hence, with this test in view, we will 
demonstrate the theory of the line and endless chain 
method in practice. The author arrived in New 
York, a stranger among strangers. He took for 
his first line of small policies the locomotive 
engineers on one of the large railroad systems en- 
tering the city. These engineers numbered from 
three to four hundred. The methods he employed 
were as indicated in this and previous lessons. In 
due time he branched from the line by the endless 
chain through all of the other departments 
of the railroad system and then out among 
all other lines and classes in Greater New 
York. 

16. The result — practically all of the engineers 
under fifty years of age in the passenger or 
freight service entering New York over the lines 
of the system in question, insured with him for 
amounts ranging from $1000 to $5000. The 
same result is true with the heads and subheads 
of the other operating departments, besides the 



138 THE AKT OF SOLICITING. 

many policies scattered by the endless chain among 
other classes. During this time the soliciting 
agent never met but one prospect with a policy 
in the company he represented. The applicants he 
procured, to the best of his knowledge and belief, 
never heard of the company, except through him, 
his policy-holders, prospects or friends. Not one 
complaint has ever been heard from any one of 
these applicants ; not one policy has lapsed through 
any fault of the soliciting agent, contract, or com- 
pany. 

17. Smaller Cities, By the application of the 
same test in the same way, the same soliciting 
agent procured $30,000 in applications, ranging 
from $1000 to $5000 each, in New Orleans during 
the first thirty days he was in that city. By the 
same test and method he procured $25,000 in appli- 
cations, ranging from $1000 to $3000, during 
the first thirty days he was in a little town — Mc- 
Comb City, Miss. The smaller cities mentioned 
were consecutive points. 

18. The Cross Roads Method. By the appli- 
cation of the same test in the same way, the same 
soliciting agent practically lived for five years in 
a buggy, working rural country districts by the 
Cross Roads method. It was on July 1st that he 
tied a livery horse to the fence in front of a 
country doctor's, at a Cross Roads blacksmith 
shop, store and post-office in Tennessee. He was 
ten miles from a railroad and 140 miles from 



THE ART OF DELIVERING POLICIES. 139 

acquaintances. He met the doctor, explained his 
mission, and he arranged to board with him while 
working that section. The soliciting agent 
secured a list of hopeful prospects within a radius 
of five miles, and circularized them as indicated in 
the fourth lesson. He then went to the next point 
or section, fifteen miles distant, explained his 
mission to the doctor there, and arranged to 
board with him. He then circularized all the 
hopeful prospects within a radius of ten miles 
of that point. 

19. He then returned to make his closing 
rounds at the first point. The examiner rode with 
him, and examined the applicants as fast as pro- 
cured. The soliciting agent then returned to the 
other point, and made the closing round in the 
same manner. It required two months to work 
the two points, but during this time he procured 
$94,000 in applications, ranging from $1000 to 
$5000 each. He then worked adjacent points in 
contiguous counties. 

20. Collateral influence. We will now cite, for 
illustration, the history of five consecutive applica- 
tions procured in New York by the same soliciting 
agent within one hour, through the collateral 
influence of other policy-holders. The soliciting 
agent called to interview a master mechanic. The 
road foreman of engines, on his own motion and 
initiative, inquired how much a policy would cost 
him. The soliciting agent replied and procured 



140 THE ART OF SOLICITING. 

his application for $5000, premium $212.95. The 
soliciting agent then met another man in an adjoin- 
ing room, whose brother was insured with him, 
and procured his application for $2000, premium 
$87.30. This applicant introduced the soliciting 
agent to two strangers who were present, and he 
procured their applications for $2000 each, 
premiums $83.20 and $62.86. When leaving the 
yard, he met another man with whom he had only 
a bowing acquaintance, and procured his applica- 
tion for $1000, premium $49.90. In other words, 
five applications for $12,000 insurance, and pre- 
miums amounting to $496.21. If you imagine this 
result can be obtained within an hour in 
any other way, except by the collateral 
influence of the line and endless chain method 
—try it! 

21. The Influence of Little Things. The same 
soliciting agent, on the 11th day of February, in 
New Orleans, received a letter from the company, 
with two blank applications enclosed, and a 
request for an applicant on the blank dated the 
11th in honor of the President, and an applicant 
on the blank dated the 12th in honor of the Vice- 
President. It was then two o'clock. The solicit- 
ing agent selected a Mr. Mitchell in Algiers, on 
the opposite side of the river, as a sure applicant 
for the first blank. While crossing the river he 
was informed that Mr. Mitchell wanted to see him 
and take a policy. That made assurance doubly 



THE AET OF DELIVEKING POLICIES. 141 

sure. As he passed a corner grocery in Algiers, 
a stranger, whom he had befriended in a little 
matter involving a quarter, introduced him to two 
men standing in the door. The soliciting agent 
showed the men his "line of goods," procured the 
application of one for $2000, premium $80, on the 
blank in honor of the President. He sized the 
other man up as a cheap clerk, who inquired how 
much a fifteen-year endowment would cost him. 
When told, he replied that he would take $5000, 
premium $356.50. The soliciting agent mentally 
questioned his ability to pay for it, and told him 
frankly that he could not get it on account of his 
height and weight. The "clerk," looking over the 
rim of his glasses, replied that he could. There 
was a gleam in his eye and a tone in his voice 
indicating that he knew what he was talking 
about. Without further remarks, the soliciting 
agent accepted his application on the blank in 
honor of the Vice-President, feeling that he 
had lost the examination fee, on a "not-taken 
policy." 

22. These two application blanks were all the 
soliciting agent had in his pocket; hence, he had 
to return to New Orleans without seeing Mr. 
Mitchell. The applications were approved and 
policies issued. The soliciting agent then investi- 
gated the financial standing of the "clerk." He 
ascertained that the "clerk" owned the store and 
block in which it was located; he was a stock- 



142 THE AKT OF SOLICITING. 

holder in the Algiers Bank, and that he had money 
out on bond and mortgage. When the soliciting 
agent called at the store to deliver the policies 
the "clerk" was weighing sugar. He informed 
the soliciting agent that the other applicant was 
his brother-in-law; hence, by arrangement, he 
would pay for both policies. He did so — $436.50. 
The soliciting agent then apologized for his error 
in sizing the applicant up when he procured the 
application, and inquired what it was that 
"saved him." The applicant replied, "Your name 
was my mother's maiden name/' The soliciting 
agent suggested that, in honor of the coincidence, 
they make it $5000 more. The applicant replied 
"No." He had just taken $5000 more with 
another soliciting agent in another company — and 
he kept on weighing sugar. 

23. The soliciting agent then decided to go 
and get Mr. Mitchell's application. When he 
arrived at the house, there was crape on the door. 
Mr. Mitchell had been killed that morning by 
accident. The soliciting agent returned to the 
ferry, and, as he stood on the levee waiting for 
the boat, his eyes roamed across the river and over 
the low buildings of New Orleans, while his 
mental vision saw, as never before, the collateral 
influence of little things. Two sentimental appli- 
cation blanks and the influence of a name and 
quarter procured $7000 insurance and $436.50 in 
premiums that he would have never otherwise 



THE AKT OF DELIVERING POLICIES. 143 

received. The absence of an extra application 
blank on the same day prevented Mr. Mitchell 
from leaving $2000 to wipe away the tears of his 
widow and hush the cries of his fatherless chil- 
dren. 



REVIEW QUESTIONS 

Define the art of delivering policies. What 
governs the time and place to deliver policies? 
What should your method of procedure follow? 
Enumerate the order in which the major points 
should be explained. Why should you explain the 
name of the policy? When does an applicant ac- 
cept a policy by faith? How would you fortify a 
policy against adverse contingencies? How are 
the points of a policy expressed? Are they in 
simple terms? What conclusion do policy-holders 
jump at when they fail to understand their poli- 
cies? Will they come to the agent for explana- 
tions? If not, what do they generally do? What 
is the popular impression about all twenty-year 
policies? Why do misfit policies breed dissatis- 
faction? Illustrate how policies are twisted. De- 
fine the word endowment. 

State how our methods of procuring prospects 
enable a solicitor to select the best plans for an ap- 
plicant. How can an applicant's confidence in an 
agent be destroyed? From what classified source 
are applicants procured? The number of appli- 
cations procured are in proportion to what? How 
is a method best tested? How much time is re- 
quired to deliver a policy? Are policies mathe- 
matical equivalents? Can you judge a prospect's 
financial circumstances by his appearance? What 
morals are taught by "little events" in field work 
and is there any known way by which we can 
measure their far-reaching effects? How would 
you fortify your policy-holders against "twisters?" 



LESSON VIII 

THE SCIENCE OF CREDIT AS 

APPLIED TO INITIAL 

PREMIUMS 



The Science of Credit as 

Applied to Initial 

Premiums 

The various life insurance companies have dif- 
ferent rules governing the settlement of initial 
premiums on delivery of policies. Some com- 
panies in America require cash settlements ex- 
clusively, whereas other companies frequently 
accept notes in lieu of cash, providing the solicit- 
ing agent guarantees to pay the examination fee, 
term rate, or net premium in event the note is 
not paid. 

1. The majority of soliciting agents for all of 
the regular Ordinary companies in America 
accept notes, more or less, in lieu of cash on 
delivery of policy, and they advance the cash 
premium to the company as a personal and private 
transaction. 

2. Many of the contingencies that arise to 
cause the non-payment of notes cause the non-pay- 
ment of renewals, regardless of whether the initial 
settlements were by cash or note; hence the funda- 
mental truths in this lesson are as essential to 
insure the payment of renewals as they are to 
insure the payment of notes. A soliciting agent 
should exercise the same degree of caution when 
establishing business on a cash basis, to insure the 
payment of renewals which involve a profit or loss 



150 THE AET OF SOLICITING. 

to a policy-holder and company, as he would exer- 
cise in establishing business on a credit basis to 
insure the payment of notes which involve a profit 
or loss to him. 

3. The percentage of a soliciting agent's un- 
paid renewals on business procured exclusively on 
a cash basis will approximate the percentage of his 
unpaid notes accepted on a credit basis; hence the 
payment of renewals and notes is contingent upon 
the method by which the business is procured and 
delivered. 

4. Settlements. Cash on delivery of policy is 
an ideal settlement, but, like other ideals, it cannot 
always be attained. Life insurance companies as 
a rule allow thirty days from the date of issue for 
the delivery of the policy and the collection of the 
initial premium in cash. The time allowed, when 
considered in connection with the privilege of 
making the payments annual, semi-annual, or 
quarterly, appears to be sufficient to meet the con- 
venience of all applicants. The home office records 
of initial settlement on millions of new business 
each year seem to confirm this impression. These 
records, however, are evidence that the managers 
or soliciting agents remitted the initial premiums 
in accordance with the company's rules; but they 
are not evidence that the applicants paid the 
initial premiums in cash on delivery of policy, or 
that they ever paid them. In other words, the 
soliciting agent may have advanced the premium 



THE SCIENCE OF CKEDIT. 151 

to the company by mutual agreement with the 
applicant and accepted his note in lieu of cash on 
delivery of policy, or the solicitor may have 
accepted the applicant's note in payment of the 
initial premium and he may have endorsed it to 
the manager, who may have advanced the cash 
premium to the company and charged it to the 
soliciting agent's account. Both of these methods 
are in common practice among the soliciting agents 
and managers of the Ordinary companies. 

5. An applicant's note is never as good as the 
money; hence, if it is accepted by a solicitor, it is 
the result of conditions and not from choice. The 
majority of prospects in towns and cities live close 
to their earnings, with obligations often contracted 
in advance of their income, and in country terri- 
tory the money season comes and goes, as a rule, 
with the crops, but once or twice a year. If a 
company's rules do not accord with a prospect's 
convenience as to time in paying the initial pre- 
mium, he will postpone the application until his 
convenience accords with the rules. He, perhaps, 
reasons that he has lived several years without a 
policy and he believes from his point of view that 
he will live two or three months longer, until he 
can afford to pay the premium. It is true, he may 
die the next day, but the fear of death, as a rule, 
does not prey upon his mind with sufficient force 
to make him borrow the money. 

6. If the delay was the only question involved, 



152 THE AET OF SOLICITING. 

you could afford to wait for the application, but 
experience will teach you in America that when 
the time comes for another interview, you may find 
that the prospect has insured through some other 
soliciting agent who arranged the payment to suit 
his convenience, or that he has made other arrange- 
ments for the cash settlement of the premium. 
Hence it is obvious in theory and certain in prac- 
tice that there is an interval of from one to four 
months between the convenience of some prospects 
and the time allowed for initial settlements by the 
rules of some companies. If you cannot bridge 
this interval by changing the premium from 
annual to semi-annual or to a quarterly payment, 
or by a preliminary term rate, as suggested in a 
previous lesson, then you will have to postpone the 
application, or arrange the settlement by note in 
lieu of cash on delivery of policy. You cannot 
accept a note, however, in settlement of the 
premium unless you have a working capital, from 
which to advance the cash premium to the com- 
pany; and if you have a working capital, you 
cannot afford to advance a premium until you are 
master of the science of credit as applied to initial 
premiums. 

7. A Note Settlement. A promissory note in 
America is the handmaid to Ordinary business. 
A note frequently has more force in procuring an 
application that hinges on the terms of settlement 
than all of the benefits and privileges of a policy 



THE SCIENCE OF CREDIT. 153 

combined, because it frequently procures the appli- 
cation when all of the other means have failed; 
hence a note is another important factor that 
determines your average number of applications to 
interviews. 

8. Life insurance notes, however, have but few 
friends among their acquaintances. It is alleged 
that insurance notes have financially ruined more 
soliciting agents and managers than all the other 
field causes combined; hence they have but little 
credit with companies, managers, and banks. We 
admit the allegation and enter a plea of confession 
and avoidance in defence of the note. The loss 
was not caused by the note, but it was caused by 
the incompetency of those who procured and 
handled it. The same disastrous results attributed 
to the notes would have followed in the wake of 
renewals, if their non-payment involved the same 
liability upon the soliciting agents and managers, 
A note is dangerous or serviceable in proportion to 
your knowledge of how to use it. If the contin- 
gencies that surround insurance notes are your 
master, you should confine your business exclu- 
sively to a cash basis ; but if you are master of the 
contingencies that surround the notes accepted in 
settlement of initial premiums, they will be paid 
with a moral certainty. 

9. The Risk. A note is evidence of a debt, and 
it is a moral or legal risk. A moral risk is one 
that is execution proof, and it is good or bad. 



154 THE AET OF SOLICITING. 

according to the financial ability and character of 
the applicant who executes it. A legal risk may 
be secured by the process of law without regard 
to character, because the maker or applicant owns 
real or personal property that is subject to 
execution. For illustration, one of the oldest 
and largest mercantile houses in New York does 
a credit business exclusively on moral 
risks; whereas another large mercantile house 
does a credit business exclusively on legal 
risks. 

10. The majority of notes accepted in settle- 
ment of initial premiums in towns and cities are 
moral risks, whereas the majority of notes accepted 
in country territory are legal risks. Contingencies 
may arise in various ways to cause the non-pay- 
ment of notes. They may arise from defects in 
understanding in connection with your company, 
or policy, or they may arise from defects in char- 
acter, form of the note, inability to pay, or your 
method of collection. These contingencies should 
be anticipated and eliminated by a careful selec- 
tion of policy form that is best adapted to the 
applicant's age and circumstances, by a scientific 
presentation of the major and minor features of 
the policy, and by a proper delivery of the same 
in accordance with our previous instruction. The 
contingencies that arise to cause the non-payment 
of notes or renewals from defects of character, or 
inability to pay, can be anticipated and eliminated 



THE SCIENCE OF CEEDIT. 155 

when you procure the names of prospects by the 
Endless-Chain or Cross-Roads methods. These 
methods are designed to place you in a confiden- 
tial relation with men who are well acquainted 
with the habits, character and financial circum- 
stances of your prospects. 

11. The note executed by applicants in settle- 
ment of initial premiums are not protected by the 
principle of self-interest as well as the notes they 
execute for other consideration. They may pay 
a note due a bank or a merchant to protect their 
credit, or, in view of further accommodations; but 
they may never see you again, and they may never 
desire any other or further accommodations from 
you. Hence, to insure the payment of insurance 
notes or renewals, they must rest firmly upon an 
applicant's ability, understanding, character, and 
conscience. 

12. Terms of Settlement. If an application 
hinges on the terms of settlement, and if you are 
in position to finance the business, and if you are 
willing to accept a note in lieu of cash on delivery 
of policy and advance the cash premium to the 
company, you can then tell the prospect that you 
will arrange the settlement on delivery of policy to 
suit his convenience, draw the application and 
proceed with the questions and answers, as indi- 
cated in a previous lesson. 

13. The stereotyped formula, I will arrange 
the payment to suit your convenience (in lieu of 



156 THE ART OF SOLICITING. 

specific terms), will operate to your advantage in 
several ways : 

(I.) The applicant may arrange to pay you 
cash on delivery of policy ; 

(II.) It will give you time to further investi- 
gate the moral or legal risk. 

(III.) If the application hinges on terms of 
payment, you can secure better terms on delivery 
of policy than you are apt to offer at the time of 
the application. 

14. If, however, an applicant desires to know 
the specific terms of settlement before signing the 
application, evade the question by answering that 
it will be time enough to arrange the payment 
when the application is approved and the policy 
issued by the company. Some companies require 
you to collect a partial payment with the applica- 
tion, to cover the expense of issuing the policy in 
event the applicant refuses to accept it. 

15. When you deliver a policy hinging on the 
terms of settlement, let the applicant suggest the 
best settlement that will suit his convenience. The 
chances are that his suggestion will be more 
favorable to you; if not, it will unveil his financial 
circumstances as a basis on which you can modify 
it to suit you. If he fails to pay cash on delivery, 
he will generally express his convenience in one of 
three ways: By paying you part cash and the 
balance on time, or by paying the whole premium 
in one sum at a future date, or by dividing the 



THE SCIENCE OF CREDIT. 157 

premium in two or more partial payments. If so, 
you should keep the following points in view: 

16. The Renewal. Do not arrange the settle- 
ment of the initial premium so that the payment 
will conflict with the applicant's convenience in 
paying the second premium; otherwise, the two 
payments coming together may cause the non-pay- 
ment of both, and lapse the policy. If the appli- 
cant's inconvenience is caused by other obligations 
maturing on or about the date of the initial 
premium, such as interest or a partial payment on 
a mortgage, or if the payment of the premium is 
contingent on the sale of a crop, or the receipt of 
interest or rent on a fixed date, these facts will 
always develop at the time you procure the appli- 
cation; hence you should arrange the policy date 
of renewals to accord with these conditions; other- 
wise, when the next premium becomes due, the same 
inconvenience may arise and lapse the policy. In 
other words, if the initial premium is due in May, 
and it does not suit the applicant's convenience to 
pay it until he sells a crop, or collects his rent, or 
interest, in September, you may bridge the interval 
between May and September with a note for the 
initial premium; but what about the next pre- 
mium, when it becomes due the following May, 
providing it does not suit his convenience to pay 
it until September? You can arrange the date of 
renewals at the time of application in most com- 
panies to accord with the applicant's convenience 



158 THE AET OF SOLICITING. 

by adding a preliminary term rate to the first 
annual premium. 

17. Form of Note. If you accept a note in 
settlement of an initial premium that involves a 
liability on you, make the note payable to your 
order, providing it does not conflict with the rules 
of the company. You can then remit the premium 
in cash to the company, and hold the note, dis- 
count it, or sell it, as your interest may dictate. 

18. A note in settlement of an initial premium, 
payable to the order of the company, practically 
invites non-payment. If it does not suit the 
applicant's convenience to pay the note when due, 
he reasons from the form of the note that he does 
not owe anything — he did not die; hence no one 
lost anything, and he may discharge the obliga- 
tion by returning the policy for cancellation. A 
note in this form contains nothing on its face to 
indicate that you have any interest or liability 
involved in event of its payment or non-payment; 
whereas, in fact, you have a commission con- 
tingent on its payment and you are obligated, as 
a rule, in event of non-payment, to pay the 
examination fee, term rate, or net premium. A 
note payable to your order is in a form that you can 
endorse by agreement to your manager or company, 
if desired, and, in event of non-payment, you can 
redeem it and collect it by suit or otherwise; or 
you can cancel the policy, if your contract provides 
for that option, by paying the examination fee and 



THE SCIENCE OF CEEDIT. 159 

term rate, as your interest may appear. It is, 
however, the privilege of any and all companies to 
decide what form of note they will accept, if any; 
and if they prefer a note payable to their order, 
you have no alternative except to comply with their 
rule, or to finance your own business. 

19. One Note. If an applicant wishes to settle 
an initial premium by two or more partial pay- 
ments, include the whole amount of the premium 
in one note, due on the date of the last partial pay- 
ment instead of dividing the premium in two or 
more notes. In other words, if the applicant 
wishes to pay the premium by two or more partial 
payments, thirty days apart, execute but one note 
for the whole amount and tell him that you will 
collect the partial payments as they accrue thirty 
days apart and credit them on the note. This 
method reduces the transaction to one note and it 
leaves the partial payments to adjust themselves 
by verbal agreement to any contingency that may 
arise during the period, without interfering with 
the written terms of the note. This method also 
keeps the final date of the note and the obligation 
coming toward the applicant, which, with a little 
persuasion, will often lead him to pay the full 
amount of the note at the time of the first or second 
partial payment. You always invoke the prin- 
ciple of self-interest in your favor if you procure 
a partial payment with the note or as soon there- 
after as possible. The applicant will pay the 



160 THE AKT OF SOLICITING. 

balance due, as a rule, to avoid losing the partial 
payment. 

20. Explain the Transaction. When you 
accept an applicant's note, always read it to him 
after you have procured his signature, providing 
he fails to read it before he signs it. The majority 
of applicants will sign without reading any paper 
or writing that you place before them at the time 
of the application or on delivery of policy; hence 
the necessity for reading the note to them; other- 
wise they may not know that they signed a note. 
Tell the applicant that you accept the note and 
you advance the premium to the company as a per- 
sonal and private transaction; tell him that your 
company does not accept notes in payment of 
premiums, or pay death claims with them; tell 
him that if he fails to pay the note the loss will be 
yours and not the company's. Tell him that the 
note is for money which you are loaning him to pay 
his premium, exactly the same as you would loan 
it to him to buy a watch. The applicant then 
understands the transaction; the form of note, 
payable to your order, confirms your assertions, and 
the obligation rests on his mind and conscience the 
same as all other obligations with which he is 
familiar. 

21. Take a Receipt. When you accept an 
appplicant's note in settlement of an initial pre- 
mium, take a receipt, at the same time, signed by 
him and reading in substance as follows : 



THE SCIENCE OF CREDIT. 161 

This certifies that I have received, read and 

accepted policy No for $. . 

issued by the Company , which I find 

exactly as represented by Mr 

(Dated and signed.) 

22. The applicant signs the receipt under the 
impression that it is designed for his protection, 
whereas, in fact, it is designed for your protec- 
tion. In other words, if he should default in the 
payment of the note when due, the receipt would 
bar him from alleging misrepresentation as the 
cause of non-payment. Hence the receipt in event 
of suit may be worth the face of the note to you. 

23. Collections. The notes of business and 
professional men, as well as legal risks in country 
territory, may be collected by notice from your 
office or through their local banks. Moral risks, 
however, in towns and cities, have been educated 
by custom for collectors to call for the payments 
at their homes or their places of business; hence, 
if you accept a note on a moral risk, you will find 
that calling for the money serves a threefold 
purpose; it facilitates the collection, enables you 
to clear up any misunderstanding, and it gives 
you an opportunity to procure new business among 
the applicant's friends and acquaintances. 

24. Collecting delinquent notes in remote 
country districts is a more serious problem, owing 
to the distance and expense. If you employ a 
lawyer, it necessitates remitting an attorney's fee 



162 THE AKT OF SOLICITING. 

and the initial cost of a suit. Then, after a series 
of delays or appeals, judgment may be entered in 
your favor ; then, after another series of delays, you 
may or you may not receive the money. The legal 
contingencies that surround delinquent notes in re- 
mote country districts may be eliminated in some 
states by a confession of judgment. In other 
words, a clause is inserted in the note, or a separate 
paper writing of even date, signed by the applicant 
or maker of the note, authorizing you or some one 
else, in event of non-payment, to confess judgment 
before any court of jurisdiction in the state. This 
method eliminates lawyers, trials and appeals. 
Any lawyer can supply you with a form of note or 
separate paper writing required for this purpose. 
25. Notes in Escrow. When a note is executed 
in settlement of an initial premium at the time 
of application, it is executed in escrow. It has no 
legal validity until the policy is issued and 
delivered as represented and applied for. The 
validity of the note then relates back by legal 
fiction to the date of its execution. In event the 
applicant fails to pay the note when due, and, if 
he alleges misrepresentation in event of suit, the 
burden of proof would be on you ; hence, when you 
accept a note in escrow you should keep this con- 
tingency in view. You can eliminate it, however, 
by making the note accepted in escrow payable on 
delivery of policy; then, when you deliver the 
policy, you can have the applicant sign a new note 



THE SCIENCE OF CREDIT. 163 

in settlement of the premium for the time agreed 
upon and you cancel the note accepted in escrow. 
If it is not convenient to do this, you can reduce 
the contingency of the applicant's alleging mis- 
representation to a minimum by reviewing with 
him the major and minor features of the sample 
policy at the time you procure the note and appli- 
cation, exactly the same as you would otherwise 
do on delivery of policy. 

26. Applicants, as a rule, are honest. The 
broader the horizon of your experience in dealing 
with men and credit, the more that truth will be 
emphasized. If an applicant fails to pay a note, 
or a renewal, you will find, as a rule, the cause due 
to your error in selecting the prospect, or your 
method of presenting the proposition, or the way 
you delivered the policy, or the form of the note, 
or your method of collection. 

27. You can read an applicant's character by 
his course of action when he signs the note and 
application. If, without reason, he indicates 
suspicion of you, the company or the contract, you 
had better deal with him on a cash basis. On the 
contrary, if he signs the application blank and note 
with ordinary prudence or without reading them, 
it is prima facie evidence that he is honest. 



REVIEW QUESTIONS 

Define a note. Define a moral and a legal risk. 
Are the majority of insurance notes moral or legal 
risks? Specify some of the contingencies that 
cause the non-payment of insurance notes. How 
would you anticipate and remove these contingen- 
cies? Are life insurance notes protected by the 
principle of self-interest? Is the acceptance of a 
note by a solicitor a personal or an official act? 
Why do solicitors accept notes in lieu of cash? 
How does the percentage of unpaid notes compare 
with the percentage of unpaid renewals? Upon 
what is the payment of notes and renewals contin- 
gent ? Is the delivery of a policy evidence that the 
applicant paid the premium in cash? If not, why 
not? 

How close do prospects, as a rule, live to their 
earnings ? When a company's rules do not accord 
with a prospect's convenience, how does the pros- 
pect reason? Is the delay caused by a prospect's 
convenience the only contingency to reckon with? 
Why is a note the handmaid to the life insurance 
business ? When is a life insurance note serviceable ? 
How would you arrange the terms of a note settle- 
ment? What advantage would accrue by a settle- 
ment in one instead of two or more notes? What 
form of note should you use and why? How 
would you invoke the principle of self-interest in a 
note settlement? Define a note in escrow. 



LESSON IX 
ARGUMENT 



Argument 



Argument is a direct appeal to reason for the 
purpose of determining truth. It is like a brisk 
wind that clears away the fog in which a subject 
may be wrapped and reveals the truth in a pros- 
pect's mind. A working knowledge of the follow- 
ing rules and definitions is essential: 

1. Facts and Assertions, Facts are truths; 
assertions are statements that may or may not be 
true. 

2. Conviction and Persuasion. Conviction is a 
belief established by an appeal to reason; persua- 
sion is a belief established by an appeal to the 
emotions which are the springs of action. Per- 
suasion reinforces conviction. 

3. M olives and Procedure. Men reason alike, 
but they act from different motives. The higher 
the motive, the stronger is the persuasive power 
and impulse to action. Proceed from the simple 
to the complex and from the concrete to the 
abstract. State particulars first and leave sug- 
gestions and generalities until you have revealed 
the facts on which they are based. 

4. Prospects. A policy contract is your best 
argument. When the salient points of protection 
and investment are logically presented, they appeal 
to the reason and emotions of men with a com- 
pelling force that moves many to action without 



170 THE ART OF SOLICITING. 

the aid of another word. The moment these 
benefits and privileges are revealed, they answer 
many objections that would otherwise arise and 
their silent appeal to the higher motives of love 
and duty have more persuasive power than many 
appeals to a lower scale of motives. If these 
appeals fail to move a prospect to action, it is not 
always evidence that the motives of love and duty 
are absent. On the contrary, a defective under- 
standing or a lack of confidence in you may be 
strong enough to counteract a natural impulse to 
action. 

5. You can narrow an argument down to one 
or two stock objections and answers that usually 
arise in the following form : 

( I. ) "Life insurance is blood money/' No ; it is 
bread money. 

(II.) "Your Company is too small." A gold 
dollar is not as large as a silver one, but it may be 
just as good. 

(III.) "I have a friend in the business/' You 
only think you have. A friend would have pro^ 
cured your application. 

(IV.) "My wife objects/' Widows never do. 
Your wife may approve but hesitates to express 
it. 

(V.) "I do not want anything that I have to 
die to win/' You will have to die whether you win 
or lose. 

(VI.) "Times are too hard." They are not as 



AKGUMENT. 171 

hard for your family while you live as they would 
be without life insurance when you are dead. 

(VII.) "I am too old" All things considered, 
your rate is more favorable than for younger ages, 
because the young may die, but the old must die. 

(VIII.) "Let them hustle the same as I did" 
That is what you say, but that is not what you 
mean. You will be gone for a long time when you 
are gone for good, but your family who remain will 
need clothes, shelter and three square meals a day. 

( IX. ) "I will take a policy as soon as I get my 
home paid for" If you take a policy and die, the 
life insurance will pay for your home; if you live, 
you can pay for it. In either event, you secure 
the payment. 

(X.) "I cannot pay for it now and I will not 
give my note" If you live you can pay your 
note; if you die, it will be paid by your life insur- 
ance. You have no right to take chances on death 
or your ability to get life insurance later. 

(XI.) "If life insurance is such a good thing 
why do not millionaires put more money in it?" 
They would if they could. The amount of life 
insurance that any one man can buy is limited and 
conditioned on a good physical record, a good 
family history and a good personal history that 
money cannot buy. 

(XII.) "I can beat the investment by putting 
my money in a savings bank" Suppose you try 
by depositing $100 per year in a savings bank and 



172 THE AET OF SOLICITING. 

also deposit $100 a year in a life insurance company 
for $3000 insurance. Now suppose you make three 
deposits and die — what then? Your beneficiary 
would draw $300 from the savings bank and $3000 
from the life insurance company. 

(XIII.) "I can use my money to better advan- 
tage/ 3 You may if you live; if you make no bad 
investments and if you save it. These ifs, how- 
ever, can only be eliminated by life insurance 
where your small savings are consolidated with 
the small savings of many others into large and 
profitable investments. The fixed dates for your 
premium deposits in life insurance have a com- 
pelling force that is absent in the voluntary 
savings of small amounts. 

(XIV.) "I am paying too much for my life in- 
surance/' I can reduce your premium and make the 
average cost per $1000 lower. In other words, 
if you have $5000 Endowment with annual pre- 
mium deposit of $50 per $1000, or $250 per annum, 
I can reduce the average cost per $1000 by 
adding $5000 more life insurance on a Term plan 
for $75 per annum, making your total amount of 
insurance $10,000 and your total annual premium 
$325— an average cost of $32 per $1000. 

(XV.) "I can carry my own risk/' You may 
carry it in fire insurance but not in life insurance. 
If you should burn out, it is your loss ; but if you 
die, it's your family's loss. You carry no risk in 
life insurance because when you are dead your 



ARGUMENT. 173 

wants end. You may never burn out, but you must 
die. You protect yourself with fire insurance from 
a loss that may never occur and you expose your 
family to a loss by your death that must happen 
sooner or later. 

(XVI.) "Insurance is gambling." No; you 
gamble when you do not insure. You are betting 
against death and you are sure to lose. A life 
insurance company takes no chance on you as an 
individual. They deal with you as one of an 
average number of individuals. The death rate 
of an average number of individuals is certain, 
hence there is no element of chance. 

(XVII.) "I am not going to leave life insur- 
ance for some other fellow to squander/ 3 You are 
not going to take anything with you when you die. 
The other fellow would squander other property 
as quick as he would life insurance. If you die 
without life insurance, your wife may be compelled 
to marry the other fellow for a living. 

(XVIII.) "God will provide for my family/' 
He has already provided for them if you will 
utilize the means at your disposal ; a means that will 
enable you to shift the burden that may crush your 
family in event of your death to the shoulders of 
many in a life insurance company who would not 
feel it. You cannot atone for your neglect to do so 
by a death-bed repentance. It is then too late for 
life insurance. God has warned you in the Scrip- 
tures that he who provideth not for his own house- 

vvv\ >5 



174 THE ART OF SOLICITING. 

hold has denied the faith and is worse than an 
infidel. 

6. Final Appeal. There will come a time when 
there will be one or two honest hours in your life. 
One may be an hour in old age, the other may be 
the hour of death. These will be hours in which 
your Necessities or Conscience will ask what pro- 
vision you have made for yourself or those who may 
be dependent on you. We may then see your chil- 
dren as you have seen others scattered like sheep 
upon the mountain side ; we have observed the cold 
charity of relatives and friends surrounding the 
infirmities of old age and we have heard the 
prayers, that perhaps you may have heard, for the 
chords of life to snap rather than to live on under 
such unfortunate circumstances. There will come 
a time when you may need a strong arm of protec- 
tion around your old age or around your family, 
hence do not leave them exposed to pitiless poverty 
and its attendant temptations in event of your 
death. 

7. Competition. The best way to meet face to 
face competition is to avoid it. There are times, 
however, when this course of action would not be 
justified. In that event, impose a condition that 
at the close of the argument, the prospect must 
apply for a policy through you or your competitor. 
Formulate and agree on a method of procedure in 
order that every step in your argument may bring 
you nearer the end. The prospect is the judge and 



ARGUMENT. 175 

he should announce his decision on every point 
scored and tally it for or against you in order that 
there may be nothing to do at the conclusion of the 
argument except to count up the score, announce 
the result and sign the application. 

8. Methods of Procedure. Company, contract 
and result cover the classified scope of an argument 
in competition. The scope, however, may be 
narrowed down by agreement to a question of con- 
tract, or contract and results without raising any 
question of company. The question of scope 
should be governed by the amount of the policy 
in view, intelligence of your prospect and your 
knowledge of the business. In other words, if 
you know your business and have nothing to lose 
by comparison of contracts, you can limit the argu- 
ment to a question of contract. 

9. On the other hand, if you are not sure of 
yourself, or if you feel certain that you would lose 
on a comparison of contracts, you should broaden 
the scope of your argument so that it will compass 
company and results, because the strong points you 
score in favor of your company and results, 
together with whatever points you score on con- 
tract, may win the decision. In either or any 
event keep in mind the distinction between facts 
and assertions. Keep your ears open for asser- 
tions that are not facts, because by refuting them 
you may end an argument with terrific effect upon 
a prospect's confidence in your competitor's 



176 THE ART OF SOLICITING. 

integrity and win a decision in your favor that 
you might otherwise lose on the merits of your 
respective companies, (Contracts and results. 
Fortify yourself against this method of attack by 
keeping in good humor and asserting only facts 
that you are in position to prove. 

10. The following suggestions cover a few of 
the points for comparative argument : 

(I.) Company. Economic advantage of or- 
ganization — mutual, stock or mixed. Assets, sur- 
plus and volume of business. 

(II.) Contract. Rate, plan, conditions, restric- 
tions, benefits and privileges. The advantages or 
disadvantages that accrue in the operation of 
insurance laws of the states in which the companies 
are chartered. 

(III.) Results. Methods of dividend distribu- 
tion — participating and non-participating. Eco- 
nomic advantages in management — investment, 
interest earnings, methods and promptness in 
paying death claims, maturities, loans and cash 
values. 

11. If your competitor claims that he repre- 
sents the best company, then refer to yours as the 
second best, because there cannot be but one best. 
If a prospect indicates that he is guided by your 
competitor's assertions, instead of by facts, tell 
him that you can make assertions just as alluring 
as your competitor. Prove one thing at a time ; go 
direct to the point, and as soon as a prospect is 



AKGUMENT. 177 

convinced on that point — drop it. The more you 
hammer a nail after it is driven, the more you 
loosen it. Concern yourself only with real objec- 
tions. Do not mistake excuses for arguments. 
The man who admits, but does not act, is not con- 
vinced. A man's affection for his family is not 
determined by the endearing names he calls them 
nor by the money he allows them, but it is deter- 
mined with absolute accuracy by the amount of life 
insurance he carries. 

12. As an Investment. A policy is an anchor 
of security. It means safety of principal, cer- 
tainty of return, and, better still, peace of mind. 
The actuarial Sphinx in life insurance looks down 
on the world of human affairs undisturbed by 
changing customs, creeds and economic conditions. 
A policy provides a safe place for small savings 
and it eliminates the difficulty involved in finding 
good investments for small amounts that sometimes 
deter men from saving anything at all. It dis- 
counts the future and reverses the ordinary 
methods of accumulation. It forces a man to save 
by a mild compulsion in accordance with his 
resolution. 

13. The uncertainty of life is a painful 
subject. Death often overtakes even the strong 
and healthy with appalling suddenness. A prudent 
man hedges with life insurance against the possi- 
bility of a premature death. It is the only way a 
man can create an estate with the stroke of a pen. 



178 THE AKT OF SOLICITING. 

It is the safest of all investments. Trade and 
speculation may bring greater profits, but trade 
and speculation may bring ruin. The margin 
between income and expense is growing narrower ; 
hence the necessity for life insurance is growing 
more and more among all classes. Present neces- 
sities cause many men to imagine that they cannot 
afford to carry a policy. However small a man's 
income may be, there are other men living on less ; 
hence the marginal difference could be invested in 
life insurance. The way is simple and the duty is 
obvious. 

14. The subject, however, is too technical for 
a layman to act unadvised. He needs the service 
of a qualified soliciting agent who has an accurate 
knowledge of material facts, indispensable to a 
wise choice that a layman does not know exists 
or where or how to find. A solicitor devotes his 
whole time to this particular form of investment 
and he will always have suggestions that would not 
occur to a layman. He knows the advantage and 
the disadvantage of the different forms of policy 
contracts and their application to the different 
needs, conditions and circumstances of men. One 
company and plan may be best for one man, 
whereas another company and plan may be best 
for another man. There are many groups of facts 
to take in account when examining a company, 
plan and terms of a policy contract. There will 
always be differences of financial ability, of busi- 



ARGUMENT. 179 

ness capacity, medical skill, moral rectitude and 
liberality; differences in fundamental principles 
of administration — differences of views and ques- 
tions of plan and adaptation of features to a man's 
individual necessities. 

15. The fact that a hat or shoe is made of good 
material is important, but a man should know their 
size, shape and style before buying them. They 
may be up-to-date or they may be modeled after 
the style of one hundred years ago. If a man is 
going to build a house he would have it designed 
by an architect and constructed by a builder. The 
only prudent course for a layman to deal with the 
subject of life insurance is to consult a qualified 
soliciting agent and act on his suggestion. 



REVIEW QUESTIONS 

What is the purpose of argument? Define a fact. 
Define an assertion. Define conviction. Define 
persuasion. Do men reason alike ? Are they gov- 
erned by the same motives? How can you in- 
crease persuasive power? How should you proceed 
with complex or concrete subjects? How would 
you arrange the order of complex or concrete sub- 
jects? How would you arrange the order of par- 
ticulars and generalities? What is your best argu- 
ment in life insurance? How should the protec- 
tion and investment features of a contract be pre- 
sented to give them a propelling force? Is there 
persuasive power in a silent appeal to love and 
duty? Is the failure of an appeal evidence that 
motives of love and duty are absent? Name two 
points that may counteract a natural impulse to 
action. 

How can you narrow an argument down? State 
some of the objections and answers to life insur- 
ance. What conditions should you impose on a 
prospect before entering into an argument with a 
competitor? State the method of procedure that 
should cover the classified scope of an argument. 
Why should you keep the distinction between facts 
and assertions in mind during an argument? How 
should you fortify yourself during an argument? 
Name the classified heads under which you should 
crystallize the points for argument. Name one of 
the points that determine a prospect's affection for 
his family. How does life insurance compare with 
other forms of investment? 



LESSON X 
PERSONALITY 



Personality 



1. The moment you enter a prospect's pres- 
ence, your personality permeats the atmosphere. 
The moment he looks into your face he has an 
estimate of your character and the moment he 
looks into your eyes he knows how you spend your 
nights — in sleep or otherwise. Your face pro- 
claims what you are. If you lack sympathy and 
suppress every emotional phase in your nature, 
your face will become hard and repellent. If 
you are a dollar worshipper there will be nothing 
left in your eyes but an eager look for money. 

2. Your manner tells him whether you are 
dominated by fear or inspired with confidence. 
You can change your character. You can 
replace undesirable traits with desirable ones. 
The transformation must come from within. 
If a prospect believes in you, it is then easy for 
him to believe in your proposition. A defect in 
your personality will operate on a prospect's mind 
the same as a defect in your proposition. You 
need the psychological force of a strong person- 
ality to aid you to overcome doubt, ignorance and 
prejudice among many prospects. 

3. Character. Character is what you are — 
reputation is what other people think you are. 
You may have a good character and a bad reputa- 
tion or vice versa. The majority of prospects in 



186 THE ART OF SOLICITING. 

life insurance know you only by reputation and a 
good reputation does not always follow a good 
character; hence you should fortify your reputa- 
tion by a guarded course of action in your social 
and business relation with the people. A solicit- 
ing agent should be a gentleman with a high regard 
for the feelings, rights and interests of every one. 

4. Temptation presents itself in many forms. 
It may be to let a prospect act under a false 
impression, or it may be in the form of a rebate 
on which an application may hinge, or it may be 
to take advantage of a prospect's ignorance of the 
subject of life insurance and twist him from one 
company to another. In whatever form tempta- 
tion presents itself, if you yield — you lose. The 
temporary gain is offset by the damage to your 
character and the future loss of a prospect's con- 
fidence and respect. Yielding to temptation 
develops a weak and vacillating will-power that is 
always haunted with fear and hesitation. Every 
temptation you overcome strengthens your will- 
power and develops a tenacity of purpose. Will- 
power is the capital stock of all strong personali- 
ties. 

5. You represent both the applicant and the 
company, hence you should be frank, open and 
honest. A prospect is quick to recognize it when 
you have his welfare at heart. Your faith in 
yourself, company and policy-contract should be 
implicit. Your earnestness when inspired by con- 



PERSONALITY. 187 

fidence often makes a stronger appeal than words 
or reason. Confidence is the genius of success. 

6. Mental attitude is the mould in which char- 
acter is formed. "As a man thinketh in his heart, 
so is he." A soliciting agent is the result of his 
thoughts. If he is satisfied with himself and his 
condition and wants nothing better, it may be 
because he knows nothing better, he has heard of 
nothing better, or that he has had nothing better. 
Many soliciting agents, however, are anxious to 
improve their condition, but they hesitate to im- 
prove themselves. 

7. Ambition. Ambition is the mainspring in 
a man's life. It is a desire to attain by moving 
forward and upward, step by step, a gradual 
elevation toward a central purpose. Without 
ambition there is no incentive to improve and no 
vitality in work. The essence of progress is 
change from a lower to a higher plane. Plan and 
method underlie all achievement. A soliciting 
agent should have a purpose and then climb 
steadily and persistently toward it. He should 
begin at the bottom and evolve his plans, step by 
step, just as a great artist begins by painting the 
bones, then the muscles, then the flesh and then 
the skin until the picture is completed. Men who 
succeed are men with a purpose. All great enter- 
prises and institutions were once a vision and 
purpose in the mind of a strong personality. 

8. Courage. Soliciting agents with courage 



188 THE ART OF SOLICITING. 

are optimistic, hopeful and loyal — cowards never 
are. The human race has been hypnotized by fear. 
It has been instilled in us from childhood. It 
dominates some people from the cradle to the 
grave. It stands in the way of all progress and 
we succeed just in proportion as we free ourselves 
from it. Men once cowered before lightning as 
a manifestation of an angry god, but when fear 
gave way to understanding, they recognized a 
force in nature that they could control. Doubt, 
uncertainty and fear will ruin anyone who enter- 
tains them* Fear inspires worry; it keeps the 
mind in a state of chronic anxiety and it will 
paralyze effort and undermine the foundations of 
success. It will make you a victim of environ- 
ment and a slave of circumstances. The man who 
says, "I can't" — never will. 

9. "Have you something of moment planned, 

Of work, of barter, or sale? 
And do you now like a craven stand 

Deterred by the fear you'll fail ? 
Then let this message of mine ring clear 

And prompt you your wings to test — 
The only failure a man should fear 

Is failure to do his best." 

10. We should not let the power of adversity 
control us. We should assert our superiority over 
environment and adverse circumstances with the 
spirit and courage of the following poem : 



PERSONALITY. 189 

"Out of the night that covers me, 
Black as the pit from pole to pole, 

I thank whatever gods there be 
For my unconquerable soul. 

In the fell clutch of curcumstance 
I have not winced or cried aloud ; 

Under the bludgeonings of fate 
My head is bloody, but unbowed. 

It matters not how straight the gate, 

How charged with punishment the scroll, 

I am the master of my fate, 
I am the captain of my soul." 

11. Fear has no place in the life of a progres- 
sive man. Progress to-day has to be forced in 
everything that is sold and life insurance is no 
exception; hence do not let the shadow of fear 
cloud your mind — expel it as you would a thief 
from your house. 

12. Good health and a good bank account are 
also strong forces in your personality. A solicit- 
ing agent should keep his body and mind in good 
working order. If he wastes his strength and 
vitality the chances are that he will be careless and 
indifferent to his opportunities and responsibili- 
ties. A good bank account gives him a sense of 
security and makes him self-reliant and indepen- 
dent. 



190 THE ART OF SOLICITING. 

13. Life insurance is a character making as 
well as a beneficent institution. There is no other 
vocation that will develop quicker the potential 
value of men and women. A strong personality 
is not the result of sudden transition. It is the 
product of long practice, experience and growth. 
The ideal soliciting agent in life insurance has the 
mental, motive and vital temperaments well 
balanced and blended. He is endowed by nature 
with reflection, action and feeling. The mental 
temperament makes him thoughtful, reasonable 
and deliberate; the motive temperament makes 
him active and energetic, and the vital tempera- 
ment gives him feeling and sentiment. 



REVIEW QUESTIONS 

What happens the moment you enter a prospect's 
presence ? What does he know the moment he looks 
into your face? What does your manner tell him? 
How will defects in your personality operate ? Why 
do you need the force of a strong personality to 
aid you in soliciting life insurance? What is char- 
acter? Does a good reputation always follow a 
good character? Why should a solicitor always be 
a gentleman? In what forms do temptations present 
themselves in soliciting life insurance ? What effect 
does yielding to temptation have on your character ? 
Why should you be frank and honest with appli- 
cants? What makes a stronger appeal to a pros- 
pect than reason? What is ambition? 

What is the essence of progress? Why should 
a solicitor be governed by a purpose ? All great en- 
terprises and institutions were once what? What 
does courage make of a solicitor? The human race 
has been hypnotized by what? What does fear do 
and inspire? Should we let the power of adversity 
control us? Has fear a place in the life of a pro- 
gressive man? Does progress have to be forced? 
Name two strong forces in a good personality. 
How should a solicitor keep mind and body? In 
what way is life insurance a character building pro- 
fession? Is a strong personality the result of a sud- 
den transition? What constitutes an ideal solicitor? 
In what mould is character formed? Can you im- 
prove your condition without improving yourself? 
Is there any incentive to improve without ambition ( 



LESSON XI 
TIME AND WORK 



Time and Work 

1. Success in life insurance requires time and 
work the same as it does in all other lines of 
human endeavor. It requires time and work to 
procure hopeful prospects ; time and work to inter- 
view them ; time and work to procure their applica- 
tions ; time and work to have them examined ; time 
and work to deliver policies; and, sometimes, time 
and work to collect the premiums. It requires 
time and work to establish a clientele of friends, 
acquaintances and policy-holders in order to secure 
a current of influence that will enable you to pro- 
cure business faster and easier. Hence, time and 
work are factors that help to determine your 
average number of applications to interviews. 

2. People will not come to you, as a rule, and 
apply for life insurance. The reason why this is 
so may be interesting, but the fact remains that if 
you procure the business, you will have to go after 
it. Unsolicited applications are so rare that they 
are viewed with suspicion by life insurance com- 
panies and managers. As evidence of which, one 
of the leading companies of the United States 
issues instruction for their agents and soliciting 
agents to thoroughly investigate the motives and 
financial standing of strangers who apply, unso- 
licited, for insurance. 



198 THE ART OF SOLICITING. 

3. Time. Life insurance soliciting agents are 
masters of their own time. Observation and 
experience teach that when you work for yourself, 
you are . working for a generous master. The 
majority of soliciting agents need a task master 
in the form of a boss, allotment or some other 
method that will tie them down to a definite task 
each week or month. One soliciting agent will tie 
himself down to earning his living expenses for the 
whole month during the first week and the balance 
of his earnings during the month represents his 
savings; another solicitor will tie himself down to 
writing a specific amount of business each week or 
month; and other soliciting agents will use other 
methods to compass the same end. 

4. You will waste time and lose prestige among 
prospects if you are deficient in a working knowl- 
edge of the science of insurance and the art of 
soliciting. You will waste time and lose oppor- 
tunities if you persuade yourself that this or that 
hopeful prospect will not insure and thereby fail 
to interview him. There is no known way by 
which you can accurately anticipate what a hope- 
ful prospect will do except by a direct personal 
interview. If you interview all of your hopeful 
prospects regardless of your preconceived ideas, 
you will find that at the end of a week or month, 
you have procured many unexpected applications 
not only from your hopeful prospects, but from 
others whom you met by chance. 



TIME AND WORK. 199 

5. You will waste time if you interview 
prospects under adverse conditions ; you will waste 
time if you interview prospects who are not finan- 
cially or physically able to procure insurance; you 
will waste time if you fail to use the eye and ear 
method of reaching a prospect's understanding; 
you will waste time if you fail to act on an implied 
consent to take a policy; and you will waste time 
in trying to satisfy dissatisfied policy-holders if 
you fail to deliver policies in accordance with our 
instruction in the Seventh lesson of this course. 
You will also waste time and lose money if you 
accept notes in lieu of cash for initial premiums 
unless you are master of the science of credit. 

6. Many soliciting agents waste time by a house 
to house, office to office method of soliciting 
Ordinary, instead of using the line and endless- 
chain method as taught in the Fourth lesson. The 
primitive method of house to house soliciting for 
Ordinary was conceived and born in the delusion 
that the art of selling life insurance is the same as 
the art of selling merchandise. There is no 
analogy between the two lines of salesmanship. A 
man is inspired to buy merchandise through selfish 
motives, whereas he is inspired to buy life insur- 
ance through emotions of love or duty. A man 
buys merchandise for the use and benefit of him- 
self, whereas he buys life insurance for the use and 
benefit of someone else. The art of selling mer- 
chandise is the art of appealing to the selfish 



200 THE ART OF SOLICITING. 

instincts in human nature, whereas the art of sell- 
ing life insurance is the art of appealing to a 
higher scale of motives. The quicker you draw 
the line of demarcation between these two lines of 
salesmanship, the sooner you will eliminate a waste 
of time by this delusion. This does not, however, 
apply to Industrial insurance which applicants buy 
for the same reason that they buy fire insurance. 
In other words, a man buys fire insurance to pro- 
tect himself in event of loss by fire; and he buys 
Industrial insurance to create a burial fund to 
protect himself in event of a child's death. 

7. Work. Work is a balance wheel in your 
life. Natural gifts will never make up for the 
lack of work. If you are deficient in educational 
advantages, you must overcome it by work; and, 
if you are deficient in natural gifts, you must over- 
come it by harder work. Work will raise you 
above the small personalities in life; it will clear 
temptation from your mind and it will teach you 
courage, patience and self-reliance. It will con- 
centrate all of your mental powers into forgetful- 
ness of everything except your work. Hence, the 
question in its last analysis is not, are you a genius 
or a natural born soliciting agent, but are you a 
worker? If so, then your success as a soliciting 
agent in life insurance depends on your method of 
work, the character of your work and the spirit in 
which you work. 

8. Success is the reward of intelligent work. 



TIME AND WOKK. 201 

You must not only work but you must work with 
a directed energy; otherwise, the amount of your 
work may be out of all proportion to the result 
attained by your work. Talk is work when your 
brain, heart and conscience are behind it and you 
have a definite purpose of procuring applications, 
delivering policies and collecting premiums in 
view. The way to make work easy is by continuous 
work. You will then acquire the habit of work 
as well as a keen "feather edge" that you other- 
wise lose by intermission of work. If you cease 
soliciting for a few days or weeks, you will find 
how hard it is to begin again. Work is an 
antidote for pain of the heart and a surcease for 
sorrow. When the clouds of misfortune gather in 
your life; when the past seems a failure and the 
future is unknown, then work is your refuge and 
the price of peace. 

9. Hahit of Work. Good habits and work are 
essential to success. Many soliciting agents get in 
the habit of rebating, habit of misrepresentation, 1 
habit of depending upon others for prospects and 
the habit of selling life insurance in all kinds of 
ways except on its merits to the detriment of all 
concerned. Habit establishes the trend of your 
life. It makes the paths in which you move and 
live. Nearly all your actions are performed by 
habit and you never can do anything well until it 
becomes a habit. The force of habit is so strong 
in controlling the actions of men that a brief 



202 THE ART OF SOLICITING. 

association with them will enable you to calculate 
what they will do under almost any given circum- 
stances. This force of habit is so strong that 
whole life insurance agencies have been wiped out 
by a single change in methods or legislative enact- 
ments. 

10. Character is formed by habit. Just as 
drunkards are made by single drinks so are habits 
formed by single acts. Hence, if by reason of use 
we can form bad habits, then by the same reason 
of use we can form good habits. The key to habit 
is decision. Some soliciting agents are so lacking 
in decision that they are always wasting time pre- 
paring or procrastinating. Do it now. It may 
require a struggle and continued effort, but you 
should fortify yourself with a strong resolution 
and a definite purpose until you acquire the habit 
of decision. Your measure is taken as a soliciting 
agent not by your extraordinary efforts, but by the 
result of your every day, regular work. Genius is 
but another name for the unremitting habit of work. 

11. Pleasure of Work. Work is one of the 
sources of happiness. Work may not always bring 
happiness but happiness without work is impos- 
sible. We must look for happiness in our work 
instead of our feelings; and in our service instead 
of our emotions. Idleness ends in more misery 
than the hardest toil. The ambition of some men 
is to be free from the necessity of work, as though 
work and not idleness was the evil. There is 



TIME AND WOKK. 203 

always pleasure in work when we know how to do 
things easy and well. We may envy those whose 
wealth relieves them from the necessity of work, 
but we notice in their quest for happiness that they 
are compelled to invent substitutes to take the 
place of work. Those who seek happiness in 
pleasure never find it. The experience of all ages 
teaches that to make happiness the chief aim in 
life is to lose happiness. The happiest people are 
the busiest people, whereas the most miserable 
people are those who have nothing to do. 



REVIEW QUESTIONS 

What does success in life insurance require ? Why 
does it require time and work? Will people come 
to you and apply for life insurance? How are un- 
solicited applications viewed ? What do the ma j ority 
of solicitors need? By what methods do some solici- 
tors tie themselves down to a definite task? Name 
the various ways in which some solicitors waste time. 
Is there any analogy between selling life insurance 
and selling merchandise ? To what scale of motives 
do we appeal when selling life insurance? What 
is the balance wheel in our lives ? Is there anything 
that will make up for lack of work? What is the 
best way to ascertain whether or not a prospect will 
insure? 

Genius is but another name for what? How can 
a solicitor overcome educational deficiencies? How 
can a solicitor overcome deficiencies in natural gifts ? 
Above what will work raise us ? What is the reward 
for intelligent efforts? In what manner must we 
work? Why? When is talk work ? How do we ac- 
quire the habit of work ? What do we lose by the in- 
termission of work? How can Ave make work easy? 
How does habit establish the trend of our lives? 
How strong is the force of habit ? How are habits 
formed? What is the key to habit? How is a so- 
licitor's measure taken? Is happiness without work 
possible? What does idleness end in? When is 
there pleasure in work? What does the experience 
of all ages teach? 



LESSON XII 

LIFE INSURANCE AS A 
PROFESSION 



Life Insurance as a 
Profession 



1. Life insurance is the best of all associated 
efforts yet conceived for the amelioration of society. 
It is destined to render a greater service as a moral 
and economic force in our civilization before it 
reaches the full fruition of its mission. 

2. It has made people intelligent guardians of 
their health, habits and conduct in life. It 
encourages voluntary and self-reliant thrift. It is 
reducing the percentage of pauperism in a way 
that is sure, direct and practical. It is reducing 
the percentage of pauperism among widows and 
orphans by supplying protection to those who have 
been deprived of their breadwinners by death. It 
is reducing the percentage of pauperism through 
drink by demonstrating that the liquor habit is a 
disease and declining to accept an intemperate 
risk as it would decline to accept an applicant with 
consumption. It is reducing the percentage of 
pauperism among the old by providing an easy 
way to a competency in old age, and it is reducing 
the percentage of pauperism through laziness by 
bringing the agencies of thrift to the very doors 
and firesides of the people. 



210 THE AKT OF SOLICITING. 

3. The long periods of time for which life 
insurance contracts are drawn and the consequent 
long periods of time during which the legal 
reserves must run, create extensive reservoirs of 
money that enables states, municipalities and 
individuals to finance large enterprises that would 
otherwise be impossible. Hence, the premiums 
deposited with life insurance companies by policy- 
holders not only to return in event of death, 
maturity or lapse in one form or another, but, 
during the interval, the money is working and earn- 
ing from 3 to 6 per cent., building up the indus- 
tries of the country, creating and multiplying 
business and employment for thousands of people, 
as the principal and interest works its way back 
to the companies and policy-holders through the 
arteries of trade and commerce. 

4. An itemized list of the accumulated and 
accumulating millions of assets in the financial 
statements of life insurance companies is evidence 
that life insurance is one of the greatest factors in 
the commercial progress and prosperity of a 
country. The beneficent character of life insur- 
ance is so clear and strong that it has 
swung the pendulum of legislation in some 
countries to compulsory insurance and free state 
pensions. 

5. Life insurance is the Queen of professions. 
There is no field more inviting to ambition and 
talent. Wherever there are men and women — 



LIFE INSURANCE AS A PROFESSION. 211 

there life insurance has its manifold opportunities. 
It has more advantages and blessings combined 
than any other line of human endeavor. It 
mingles financial motives with high moral con- 
siderations in a way that makes it a pleasant, 
profitable and agreeable field in which to labor. 
There is no other vocation that gives you such 
freedom of action. You are the arbiter of your 
own time, place and method of work. 

6. Your field is wide, free and open. You have 
your choice of climate, altitude and territory. You 
are free to go when and where you please. You 
can escape the heat of summer by shifting your 
field to cooler climates and you can escape the cold 
of winter by shifting your field to a more temperate 
zone. You are not limited in your work to any one 
class, color or condition of men. You meet all 
classes and all ages — the wise, the ignorant, the 
rich, the poor, the young and old. You come in 
close touch with all trades, pursuits and pro- 
fessions — all of which gives you a broad knowl- 
edge of human affairs and a deep insight in 
human nature. 

7. It is a permanent profession. You are not 
crowded or hampered and your opportunities are 
limited only by your ability. You begin to earn 
as soon as you begin to learn. You create as well 
as supply the demand for your service. You get 
what you earn and you realize all that your ability 
and efforts give you a right to expect. You are 



212 THE AKT OF SOLICITING. 

not forced to give way to a younger man at the age 
of forty, or be dismissed at the age of fifty, or be 
"Oslerized" at the age of sixty. You cannot out- 
live your usefulness. There is no interruption of 
your work by "strikes" or over production, and 
new prospects are being born every minute. Life 
insurance companies are multiplying in number; 
new agencies are being opened; old agencies are 
being divided; branch offices are being established 
and the positions being vacated by death or 
resignation must be filled. The demand for 
solicitors and managers is greater than the 
supply. 

8. A life insurance soliciting agent is a teacher. 
You are teaching men a higher conception of their 
moral duty toward their dependents. You are 
teaching a husband to be a better husband and a 
father to be a better father. You are awakening 
thoughts in men that are not for self, but for 
others. You are persuading the thoughtless and 
indifferent to provide for their own. It is an 
indoor and an outdoor profession. You are not 
chained to a desk or a bench and there is no bell 
or whistle to announce the beginning or the end 
of your day's work. There is no one ahead of you 
to hold you down or behind you to hold you up. 
You do not have to wait for clients, patients or 
customers. You are constantly increasing your 
acquaintance, strengthening your character and 
extending your influence. 



LIFE INSURANCE AS A PROFESSION. 213 

9. You have a mission higher than the compen- 
sation you receive for your service. A mission 
that provides a competency for the old and infirm ; 
a mission that saves women and orphans from 
degradation; a mission that harms no one, wrongs 
no one and helps everyone. It is a mission that 
provides a self-reliant and a direct way of relief. 
Every application that you write spells comfort 
and strengthens the social structure of society. The 
satisfaction that comes to you from these sources 
is even greater than the satisfaction that comes to 
you through your earnings. 

10. It is one of the few professions that is not 
overcrowded. Thousands of young men, through 
ignorance of life insurance and its opportunities, 
enter other professions and after years of exten- 
sive preparation fail to succeed through no 
inherent fault of their own. They realize after 
years of struggle that they were misled in the 
selection of their vocation. The Chairman of the 
Membership Committee of the New York County 
Lawyers Association states (New York World , 
April 23rd, 1911) that 70 per cent, of the 16,000 
lawyers in Greater New York are earning less than 
bricklayers or policemen. 

11. The New York County Bar Association 
confirms the assertion by stating that as a result 
of their investigations 30 per cent, of the lawyers 
in New York are making only a decent living and 
40 per cent, are struggling for existence. At the 



214 THE ART OF SOLICITING. 

April (1911) meeting of the New York County 
Lawyers Association, 680 of the members lapsed 
for non-payment of dues — one-fourth of whom 
admitted that they could not pay the $10 fee per 
year. The same ratio of failures practically exists 
in many other professions and in other cities. The 
chances of earning a competency in any one of the 
overcrowded professions are unfavorable for the 
majority of young men who enter them unless they 
are favored with special opportunities that are 
more matters of chance than training. 

12. Indirect taxation is the royal road to 
wealth. It is the secret force of great fortunes. 
The profits gathered in the purchase price from 
many people in the form of an indirect concealed 
tax have, as a rule, made the wealthy millionaires, 
merchant princes and captains of industry in this 
and all other countries. The principle of indirect 
taxation has a wider field in life insurance than in 
any other profession. The fees, charges and profits 
in all other professions are open and direct, hence 
smaller and harder to collect. The compensation 
in life insurance is in the form of commissions and 
renewal commissions, or the salaried equivalent, 
based on the gross premium paid by policy-holders. 
The commission or profit is an indirect tax con- 
cealed in the premium which they cheerfulry pay 
without question. The principle of indirect taxa- 
tion does not operate in favor of a man who works 
for wages. His compensation, as a rule, is fixed 



LIFE INSURANCE AS A PROFESSION. 215 

by the amount it requires to sustain him while 
rendering the service. In other words, his labor 
is a commodity bought and sold in the market and 
it is governed more or less by supply and 
demand. 

13. Life insurance is a profession that requires 
a high degree of efficiency and determination. No 
soliciting agent or manager ever failed to succeed 
through any fault of the profession. Many 
solicitors and managers fail to succeed in life 
insurance, but the cause of the failure is in 
the man and not the business. There is a 
popular impression that any man who is a fluent 
talker and who has failed in everything else, has 
the requisite essentials to succeed in life insurance. 
That impression has drawn many men temporarily 
into the business, tossed them for a while on the 
waves of adverse experience and dropped them — 
sadder but wiser men. The price of success in life 
insurance, aside from a strong character and 
personality, is a working knowledge of the science 
and art of writing life insurance. Now and then 
a man enters the profession without experience or 
training and from outward appearance seems to 
go up like a rocket, but as soon as he spends the 
force of his influence among his relatives, friends 
and acquaintances, he disappears from the horizon 
of the business. The moment he is compelled to 
sell life insurance on its merits among strangers, 
he fails. 



216 THE ART OF SOLICITING. 

14. It requires well-directed effort to meet 
adverse conditions and to cope with ignorance and 
prejudice among some prospects on the subject of 
life insurance. The laurels of the profession will 
never crown an idler ; or a gambler ; or a drunkard ; 
or a weakling; or a coward; or an incompetent. 
There is no chance for them. The profession has 
but little to offer a man who scatters his efforts 
among other vocations. There are but few men 
who can do several things well at the same time. 
The strongest powers become weak when divided, 
but weak powers become strong when concentrated 
on one single purpose. A soliciting agent cannot 
long survive extravagance, or the reckless use of 
credit or loose business methods. The profession 
cannot be charged with the failures from these and 
many similar causes of a personal nature. 

15. You cannot war successfully on ignorance 
and selfishness with a rate book alone. It must 
be reinforced with a clear estimate of the value 
of life insurance. If you do not appreciate the 
benefits of life insurance you cannot place them 
successfully before others. You cannot impart a 
faith that you do not possess. A deep conviction is 
contagious. The fire in your spirit should kindle 
the hearts of prospects to action. You also have 
the reputation of your company to guard, hence 
you should realize your responsibility and dis- 
charge it with justice to all concerned. There is 
no impossible gulf between you and the officials of 



LIFE INSURANCE AS A PROFESSION. 217 

your company. Your interests are parallel and 
you all have a common purpose. You are all 
factors in your company's progress, hence mutual 
confidence, helpfulness and co-operation should 
exist. Last, but not least — be loyal. 



REVIEW QUESTIONS 

Has life insurance reached the full fruition of its 
mission? What effect has life insurance had on 
the habits of people? What does it encourage? 
How has it affected pauperism? How do life 
insurance premiums work their way through the 
arteries of trade and commerce? Is life insurance 
a factor in the commercial progress of the country? 
Is it a factor in the basis of bank credits? How 
has life insurance swung the pendulum of legisla- 
tion? Is life insurance an inviting field for ambi- 
tion and talent? How wide is a solicitor's field 
for work? What are the chances of earning a 
competency in other professions? 

What is the royal road to wealth? Does the 
principle of indirect taxation apply to wages? Is 
labor a commodity? Did a solicitor ever fail to 
succeed through any inherent fault of life insur- 
ance ? What is the popular impression as to quali- 
fications essential to success in life insurance? 
What is the price of success in life insurance? How 
can a solicitor successfully cope with ignorance 
and selfishness? Can you impart a faith that you 
do not possess? Is conviction contagious? What 
should the fire in your spirit do? Whom do the 
laurels of the profession of life insurance await? 
Can a solicitor survive loose business methods? 
When do the strongest powers become weak? 
What does every application for life insurance 
spell? Is there a demand for life insurance 
solicitors and managers? 



28 1912 



